The first memory I have is of my parents fighting about money. Long-term psychological effects of this event aside (including the irony of eventually becoming a financial planner), the dichotomy of their financial attitudes taught me a fundamental financial — and life — lesson. This lesson, in turn, inspired some major life-changing decisions.
Read more about how one man teaches his kids financial responsibility.
Present Moment vs. Delayed Gratification
In that first memory, Mom was upset because Dad wanted to save for retirement, but she didn’t want to sacrifice their meager disposable income toward that intangible goal. At its core, this represents the different approaches they had to money, and in greater context, to life. After divorcing, neither of them had to compromise, and each took their financial approaches to extremes.
Mom spent what retirement savings she had during her working years, funding vacations, nice dinners and even credit card bills she couldn’t pay. She consistently lived beyond her means, using her future to pay for it. There’s no arguing that Mom lived for the moment. Not knowing what the future held, she made the most of the present, even though it was detrimental to her in the long run.
Dad, by contrast, dedicated every waking moment to saving for retirement. His working years were grim, with long hours and no reprise. Ordering dinner and renting a movie on a Saturday night was a big deal. He dreamed of traveling the world but instead saved every penny he could. He sacrificed all present moment enjoyment to secure his future. I simply prayed that one day he would enjoy the fruits of his labor.
Here are the consequences of my parents’ opposite financial approaches to life: Mom has reached retirement age, but can never retire. She will — and she has to — work until she drops. With certain health challenges, there’s no saying how long she’s got; at least every moment was lived fully.
Meanwhile, Dad has been retired for a few years. He eventually satisfied his travel dreams, exploring Europe’s rich culture and history. But before he could fully scratch that travel itch, age-related back problems made further travels impossible. He now lives a quiet life, all expenses paid by his retirement fund.
My No. 1 Financial (and Life) Lesson
Growing up between two extremes (neither being right or wrong), my own financial temperament fell in the middle, with the following mantra: Everything in moderation. Plan for the future, but not at the expense of today.
Here’s how that mantra specifically played out in my life, a life I’ve proudly lived.
- I invested a huge portion of my income as soon as I started working; through the magic of compound growth, this gave me the financial freedom to travel full-time at the age of 30, knowing my retirement was secure.
- Despite my aggressive savings strategy, those early years were very full. I was a sport skydiver, and I informally raced motorcycles. Both were expensive sports, but I made financial choices that allowed me to do what I loved with the money I had.
This concept of everything in moderation extends beyond my finances to diet, health and lifestyle, too. Every decision I make goes through the filter of present gratification versus future security and happiness. Thus, every choice is consciously made.
My first memory wasn’t a happy one, but it turned out to be the best thing that ever happened to me.
Read more about how this author secured her future with compound interest.
By Nora Dunn for GOBankingRates.com.