Thursday, October 18, 2007

My personal finance success story

This post is inspired by a great way to give kudos to my parents for getting me where I am today, and is also a contest entry over at Get Rich Slowly.

I think my personal finance success story is really my mother’s success story—because I wouldn’t be where I am today without her. This is not to say I’m a trust-fund baby—far from it—but she gave me an intellectual foundation for handling money and then a fantastic start into adult life. I managed not to screw it up, but I probably wouldn’t be where I am now without those two crucial things.

My mother’s association between me and money began about a year before I was born. My parents were in their mid-twenties, married for a few years, and felt well enough established that my father suggested they start trying for a baby. My mom thought it over and then said no—she wanted to buy a piano first, so that her future progeny could grow up to be musical (I was the first person in my family to play an instrument). They began saving, and a few months before I was born, brought home a very nice piano which sits in my mother’s home to this day.

Later as a single mother, she managed to send me and my sister to private elementary school by working midnights. We were poor, but I never knew it—the woman can squeeze three dollars worth of purchases out of a single dollar bill. Not only did she take us to summer camp each year, but she took at least two of my cousins along as well, footing the bill for all of us kids. She sent our gently used clothing and other goodies to distant and very poor relatives in eastern Europe. My earliest financial lessons were of spending money only where there is value—be it in experiences or at the grocery store, make sure you’re getting something important back—and to help those who need it.

When my mother remarried and became a stay-at-home mom again, things were easier on us financially. We’d moved to a part of the country with a much cheaper cost of living, and her new husband was a doctor. There was no private school for us to attend, so we didn’t have the cost of that to deal with either. Despite the “prominence” of being an M.D. family, we lived simply. My parents both drove used, paid-for cars, carried no credit card debt, shopped at consignment shops or Walmart for clothing (which about killed me in the popularity department), took only one vacation a year (to see family in Florida), and saved, saved, saved. During this time, my mother started listening to a new radio show called The Money Game with a host named Dave Ramsey. We were forced to hear his corny jokes and rants against credit card companies during our afternoon commute to pick all the kids up from their various schools or to and from ballet classes. I hated it, but as my later life showed, something sure sunk in.

When I was 16, I went to boarding school. One of my class requirements was a job which applied at least part of my earnings against my school bill. My mother allowed me to put the smallest percentage to my bill with the stipulation that I was now 100% responsible for makeup, toiletries, clothing, entertainment and any food I wanted that didn’t come from the dorm cafeteria. I bought a camera, ate a lot of Ramen while my roommate ordered pizza, and then learned the value of a budget.

In my senior year of high school, my parents gave me the worst blow I could imagine—they offered to pay my way to college, provided it was a college associated with their church…and if I went to a state university or any other school, I was completely on my own. Their deal covered tuition, room and board—as before, I would be on my own for personal expenses, now I would also have to buy my own books, and no, they wouldn’t give me a car. Grumbling about blackmail, I went to the church-affiliated school closest to our home which ended up being a fine school as far as education is concerned (although too religious for my taste), and graduated without a dime of debt.

During college, I didn’t get a credit card. I built an emergency fund and bought a dirt cheap, ugly used car that I fixed up myself. At one point I worked four jobs to save money for my trip to England. I never went a semester without working, and always had at least one job (usually two) during the summer as well. I had a written budget and planned what to do with any money I received.

Two weeks after I graduated, I moved to New York City with an internship and a few thousand dollars in the bank. I managed to survive for nearly a year working at Starbucks, internships and an independent bookstore before getting a “real job”. I’ve been completely financially independent since I was 22. I don’t make a whole lot of money, but I have a swanky apartment. I have money in the bank—money for emergencies, money for retirement, money for planned expenditures throughout the year. I have everything I need and much that I want. I have a credit card, which is paid off in full every month. I have a fantastic job in my dream industry.

All of this is possible because of my mother’s piano. Before I was even conceived, she was setting herself up to lead a life of example—a life of saving for what you want, prioritizing your goals, and working hard, even at crummy jobs, to make sure that you have the money for the things that are really important to you. The radio program she played when I was in the car taught me how to budget and live within my means. Her commitment to giving me a debt-free start to adult life and teaching me independence in small steps allowed me to follow my dreams much earlier than anyone else I know.

Her example underscores how important it is to raise kids to understand personal finance. While I don’t know exactly how much my parents make and I never have, I knew that they budgeted and paid off their credit cards in full every month and that they actively talked about money. My mom took steps to make me independent, from opening up my first bank account and showing me how to balance my checkbook to encouraging me to shop around for car insurance to get the best deal (I also think it’s an excellent thing that they never gave me a car, but don’t tell my 17-year-old self I said that). She’s never given me cause to associate money with friendship or a person’s worth, and has repeatedly helped those in need, with no expectation of repayment.

I’ve had to work at sticking with this fantastic foundation I was given—I did look into financing a car while I was in college, and my first year in New York involved a lot of walking since I had no money for the bus and a lot of days-old Starbucks sandwiches saved from the trash can since I was really, really tired of Ramen by this point in my life. I probably would have gotten a credit card at that point if I could have qualified and I wouldn’t have had much self-control. Working four jobs while going to school full time was exhausting and my grades probably suffered a bit. I’ve wasted lots of money here and there, mainly on cigarettes, dr.pepper, and an old boyfriend. But the fact remains that I am the most financially stable of anyone my age that I know, and I don’t see how I could have done it without both the example and knowledge my mother imparted, and also the great debt-free start she planned and saved for.

2 comments:

  1. I subscribe to your blog, and I love every entry. I'm a young 20-something learning all about personal finance on my own... and your blog provides a lot of useful information. Thanks for sharing!

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