It's not easy raising three teenage girls on your own, paying for college and graduate schools, weddings, family trips, and the other assorted expenses that come along with growing up. But my mother, at almost 72, is still one of the hardest-working people I know -- and an excellent manager of money.
My father's mother, Betty Glink, had firey red hair and a tongue to match. But when it came to children and grandchildren, she also made it work financially. A bookkeeper by trade, endlessly practical (plastic slipcovers, mothballs, and all), she was a voracious reader who knew instinctively how to make the numbers tie out at the end of the month.
I'm fortunate: I come from a long line of women who knew exactly how much change was in their pocketbooks and could stretch a dime into a dollar and make it look easy. From my 20-plus years of writing about real estate and money, I know that not everyone is blessed with such good financial genes.
Since this Sunday is Mother's Day (both here and in Latin America), I thought I'd share some of the financial wisdom that has been passed down in my family, mother to daughter.
1. Common Sense = Money Sense. According to my mother and grandmother, there's no great money magic. You have to use some basic common sense when making money decisions. In my family, spending more than you had was never an option. You had to make the numbers work even if it meant living at home, not eating out, not owning or driving a car, and not taking fancy vacations.
2. Focus on What's Really Important. Most of us seem confused when tackling our budget. We try to make room for tickets to theatre, sporting events, movies, dinners out, babysitting, gourmet coffee drinks, and vacations. My mother and grandmother taught me that it's more important to start from the most essential ingredients, add in a few top priorities, and pretty much save the rest. In our family, education was prized. So, we paid the mortgage, taxes, utilities, food, clothing, and school tuition. If you start there and cut out everything else, it's easier to to make a smart financial move.
3. Enjoy the Simple Pleasures. My parents always made time to go out on Friday and Saturday nights. But they didn't spend a lot of time and money buying things they didn't need. While their friends bought vacation homes in the mountains, boats, and fancy cars, we focused on museums, visiting with my grandparents in Florida (we drove there), and driving around the country during the summer. Instead of eating out, my mother became a gourmet cook who packed our school lunches every morning.
4. Always Invest for Your Future. In my family, the expectation was that you would graduate from college or graduate school, find a job, and make a life for yourself. The fallback position was -- well, that never came up. Instead, the emphasis was always on the future and figuring out how to make that work out. I started working full-time when I was 22 (I had summer jobs from the time I was 14, plus babysitting), and in that first year of work socked away $2,000 into an IRA. (I also bought 25 shares each of Intel and Microsoft in 1987.) At the time, I didn't know that putting in $2,000 each year from age 22 to 32 would yield more cash than if I started at 32 and continued to make that payment until I was 65. The lesson was invest for the future and the rest would sort itself out. I still believe that, and each year I sock away the maximum I can into my 401(k).
5. The Right Piece of Real Estate is a Great Investment. My husband, Sam, and I have made good money in most of our real estate purchases. That doesn't mean there weren't some harrowing moments, like the time where we purchased a condo in an auction and found out a few weeks later that we'd have to shell out $25,000 for a special assessment (we broke even on that particular piece of real estate). There are also ongoing frustrations -- for example, trying to rent our our Evanston, Illinois condo before the tenant leaves. None of our real estate moves were driven by a desire to get rich. Instead, we focused on buying the right property for us at that moment in time. One thing I did learn from my mother, who paid $35,000 for her co-op and sold it for many times that amount, is that time generally works in your favor when it comes to real estate. Buy it, hold it for a long time, and take care of it, and you should reap a sizable return when you sell it down the line.
Happy Mother's Day, Mom. Thanks for the money lessons.