Being raised by a single mom, I have always been pretty thrifty. Heck my buddies from high school say I still have my First Communion money! But you know, I watched firsthand how my mom made her modest salary stretch far enough to feed and clothe my sister, brother, and me, and it never crossed my mind that we anything less than normal. I never went without a meal and my clothes – while not the epitome of fashion – were bought new off the rack. We didn’t own one of those brand-new IBM home computers, but I did have my Walkman and even a saved up enough to buy a Sony Game Boy when I was 12.
I remember watching my mom cut coupons on Saturday mornings and doing meal planning around what was on sale that week. We often shopped for new school clothes from the sales racks. And heaven forbid we’d let a 2-for-1 offer go by, no matter what it was!
As I entered my teens, I got my first part-time job as the “hot dog” guy at the Raynham Dog Track. I remember distinctly how I gained a new appreciation for the value of a hard-earned dollar. I also realized how easy she made it all look. Looking back, I now realize that it took a lot of time and effort to make her paycheck stretch far enough to cover all of our expenses and even put a little bit to the side to cover Christmas gifts.
My mom wasn’t a financial whiz and had no ties to the financial industry, yet she instilled in me an appreciation for financial discipline, planning, and making every cent count. I knew we weren’t wealthy by any means, but thanks to her, we weren’t poor either.
As I got older, I realized that while we knew how to live within our means, we weren’t getting ahead either. My mom was not socking away money in a retirement account in hopes of retiring at age 60. Building wealth for the future was always a “tomorrow” task because paying the bills today came first.
When I entered the world of finance, I found myself drawn to the idea of comprehensive financial management. Budgeting, planning, saving, investing, all of it was exciting to me and I worked with many clients who were high-earning professionals in their own right. But I was struck by how many of them shared some of the same struggles that I witnessed from my mother – despite earning six figures or more, they saved very little. They spent almost everything they made.
What I found was that, without a commitment to financial discipline and long-term strategy, the money simply disappeared. Without a plan and a budget, many of these professionals went through all of their salary without a second thought to tomorrow.
As a father to three daughters just entering adulthood, I knew that I wanted them to have a head start on their finances. I had knowledge of financial management that took me years to acquire, and I wanted them to benefit from this.
In particular, my oldest, Maeve, is in her second year working as a nurse at Duke Hospital. Before she moved away to begin her new job, I explained to her the importance of budgeting. I wanted her to understand that managing your money isn’t just about getting by – in fact, being able to stick to a budget is just table stakes. It’s a life skill that should be the foundation of everyone’s financial journey. Once you’ve mastered that, it’s time to move on to strategies to help you build wealth for the future.
I explained the benefits of investing early and helped her enroll in her company retirement plan. While ignoring her blatant eye rolls, I pulled up a financial calculator online and demonstrated to her the power of compound interest. By starting to save in her 20’s, she could build up a substantial retirement portfolio with much less money than if she waited a decade or longer. I explained that a big salary wasn’t necessarily the key to wealth — keeping it and consistently growing it was.
Financial success doesn’t happen overnight, and I impressed upon her the potential for significant wealth if you consistently save and invest. For Maeve, regular contributions to her company 401(k) are a great start. She doesn’t need to consider speculative or exotic investments to build wealth, particularly because she has the benefit of time on her side. Slow and steady progress is our goal.
Ultimately, I want my girls to understand that financial freedom doesn’t happen by chance, and certainly not an entitlement . . . rather it’s a deliberate journey. With the right education and discipline, they have the power to create their own financial success story, regardless of their salary.
So as always – be vigilant and stay alert, because you deserve more!
Have a great week.
Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA.
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