I'm a CPA and have also earned licenses in stocks, commodities, life insurance and real estate. But as Mothers Day approaches, it occurs to me that my mom taught me everything I ever needed to know about money when I was a kid.
Over the last 30 years, I’ve read and written countless stories on money: making it, saving it, investing it, avoiding taxes on it, and using it for everything from buying a house to funding a retirement.
So I guess I’ve earned the label of financial “expert.” But as Mother’s Day approaches, it occurs to me that when it comes to establishing sound money management habits, it’s moms that are the masters.
Here’s some of what my mom taught me. Hear something similar from yours?
Pinch your pennies.
For many moms, paying more than you have to for anything isn’t just unwise. It’s completely unacceptable. Pay $5 for a fancy cup of coffee at Starbucks? My mom would no more do that than chop off her own foot with a dull ax.
One of my earliest shopping memories: I’m about 6 years old, standing in the checkout line behind my mom. I’m clutching some grocery item in one hand and money in the other – so she can score extra stuff on a “limit-one-to-a-customer” deal.
When we’re young, we think they’re cheapskates. When we grow up, we marvel at how they were able to provide so much with so little. Well, that’s how.
Put something aside.
Save just a few bucks every day, earn a decent return on it, and by the time you retire you’ll have an extra few hundred thousand in the bank.
A child of the depression, my mom knew first-hand the expression “save for a rainy day,” because when she was a kid, it was pouring. So the minute I earned my first allowance, it was off to the bank to open my first savings account.
Neither of my parents ever made much money. My dad worked for the government, and my mom was a librarian. But putting my sister and me through college wasn’t an effort, because they started saving for it the day we were born – literally.
Neither borrower nor lender be.
Borrow to buy things that go down in value, like a vacation or clothes? Are you kidding?
Credit cards are for convenience and cash back, not keeping up with the Joneses. As far as my mom was concerned, the whole concept of borrowing money smacks of desperation and is to be avoided. It’s something you do when your back’s against the wall, not when you happen to want something you can’t afford.
It’s not complicated: With the exception of a house, or perhaps in dire circumstances a car, if you can’t pay cash for it, you simply don’t need it.
As for lending money to friends? My mother has a name for that: gifts.
Do an honest day’s work for an honest day’s pay.
My mother came from a time when what you did was more important than the amount of money you made doing it. She would much rather see me poor than see me in any job that remotely involves taking advantage of other people or in any way compromising my values. In short, she’d rather see me happy than rich.
I spent part of my life as a stock broker, earning multiples of my parent’s combined salaries. Did the money impress mom? Not so much. What I’m doing now – offering honest advice and helping people with money problems – that’s something we can both feel good about.
Your mom is one of the few people in your life who’s more interested in your happiness than your wealth. Take a hint: She’s onto something.
Make your money work as hard for you as you do for it.
My mom did more than encourage her kids to save – she encouraged us to make our savings work as hard as possible by earning every possible penny in interest. She shopped her savings rates every bit as hard as she shopped for groceries, clothes, and everything else. She had no problem switching banks to get a higher interest rate, nor was she shy about asking her bank to meet or beat the offer of a competitor.
On the other hand, to my mom stocks are a trip to Vegas, only without the free drinks. On this we differ, since I’m a big believer in long-term stock investing. (See my personal portfolio here.) But that doesn’t mean she’s wrong. I can confidently say I lost more money learning to properly invest in stocks (buy quality companies when they’re cheap and hold on till the cows come home) than my four-year trip to college.
Stop patting yourself on the back and hug your mom.
If you’ve got a bulging bank account, work in a job you love, or otherwise find yourself in friendly circumstances, odds are you’ve kept most of the credit for yourself. But there are very few things any of us accomplish in life that can’t be traced back at least partially to the advice, counsel, or indulgence of others. And for most of us, that list is topped by a mom.
My mother was Betty Johnson. She lived a happy, prosperous life and died at the age of 79 on December 7, 2004. But she’s obviously still with me. And here’s something kinda cool: Now she’s with you too.
Like this post? Forward it to your mom.