A Financial Planner’s Early Money Lessons

Posted in Children & Family, Saving on

We all have a personal money history. It might be early memories about lessons learned from parents. Or the feeling we had when we first earned money. Perhaps it’s regrets we have about money wasted or squandered. I thought I’d share my memories and some of the lessons I learned about money growing up.

I feel fortunate that my family had open discussions about money and finances. My parents wouldn’t always use specific numbers but the concepts were clear. This struck my interest and it is probably not a coincidence that now I discuss money as a profession. Several of these lessons are similar to the advice I give clients today.

Treating Money with Value

At one point when I was pretty young, maybe 5 years old, my dad explained how he treated money with value. He showed me how he kept his wallet organized and the dollar bills were in order by amount. If he had loose change it would be in one place and then he would spend it. He wouldn’t let it pile up or slip into the sofa. I witnessed that even this little amount of money could help pay for things. I learned that small habits can make a difference over time.

Now this applies to saving and helping clients understand that small consistent amounts saved from each paycheck can add up over time. It also taught me the personal responsibility of keeping track of money. This is still a foundational element of the work I do with clients. Before a client meets with me I ask that they fill out an organizational questionnaire that helps them take an inventory of their money as well as other aspects of their personal finances.

Pay Yourself First

My parents always paid themselves first. This means that that savings was always a priority.  They would figure out a way to make their lifestyle accommodate whatever was leftover. Sometimes this meant explaining to me and my brother that there wasn’t much available to be spent on back to school clothes or extra holiday gifts. Fortunately, we were never wanting as children but my parents make it clear that savings was a choice and a priority.

In my financial planning practice I encourage clients to make savings automatic. You can make savings a priority by depositing it automatically in a retirement account or savings account. This way you don’t see it in your checking account and aren’t as tempted to spend it.

Need vs. Want

My parents practiced frugality. Even when they could afford extras they saved where they could. For instance they always bought used cars, consistently prepared meals at home and bought new clothes on sale or at outlets. They set a frugal example and made conscious choices about what they needed vs. what they wanted. It’s not that my parents didn’t spend money but they thought about what mattered to them and what would truly make them happy when it came to spending and saving.

I encourage my clients to be mindful about their spending too. We employ a number of strategies to do this. Unfortunately, it is our human predisposition to increase our spending and lifestyle when our salary increases. Instead, I remind clients to increase automatic savings amounts to both retirement and after tax accounts when they receive a cost of living adjustment or raise.

I hope my money memories remind you of your own and help you examine the lessons you learned early on. That can give us insight into our predispositions and habits so that we can SaveUp!

This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.

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Written by Catherine Hawley

Catherine is a CERTIFIED FINANCIAL PLANNER (TM) who offers accessible and objective financial advice to individuals and families. Her aim is to help clients gain clarity and confidence so they can pursue their definition of financial success. You can find more information about her independent practice at www.catherinehawley.com. She has worked at Rhodes & Fletcher, LLC as a Personal Benefits Specialist and at the firms of Bernstein Global Wealth Management and Barclayʼs Global Investors. Catherine has a bachelors degree in communication studies from the University of California, Los Angeles where she was a scholarship athlete and captain of the womenʼs tennis team.