Looking At ‘Generational Money Habits’

Generational money habits – How did my grandparents manage their money?

One thing that has changed significantly over the past century is people’s attitude towards money and how they manage it. Do we learn these habits from our parents, or do we recognise their bad habits and implement change to ensure we don’t do the same thing?

When I was growing up, the phrase my parents constantly used was “We can’t afford it”; even today, when I hear those words it sets me off.

My poor husband has to deal with the onslaught of comments that come from me when he has to deliver the message that we need to “tone down our spending”. In all honesty, the overspending most of the time is down to me, but the fact that I have not been able to break the “can’t afford it” cycle infuriates me!

Many articles have been written about baby boomers spending everything before they die, or millennials being overwhelmed with student loan debt, but rarely do you read articles that describe exactly how different generations manage their money.

My 99-year-old grandfather is part of “the Greatest Generation”, people who were born between 1910 and 1924. It’s crazy to think my grandfather was actually born in 1919! However, what is almost incomprehensible is that in 1929, at the start of the Great Depression, my grandfather’s parents were both killed by a horse-drawn milk truck when he was only 10 years old. My grandfather was then raised by his older sisters and a spinster aunt, and even during the Great Depression his aunt, who was illiterate, made sure my grandfather went to school so he would not be.

I imagine the events of 1929 and later greatly influenced the person he became and certainly guided his choices and decisions on how he managed what he earned. Fast-track his life to 1969: he retired at age 50 and is still living a financially comfortable retirement 49 years on. Whatever he did, he certainly did it well!

One thing my grandfather was most proud of was the fact he never borrowed money, not even for his home. In fact, he has never borrowed from anyone or owed anyone anything. I can’t even imagine being able to buy a home without a mortgage – home ownership and a mortgage go hand in hand these days.

My grandfather told me that he saved 20 per cent of each pay cheque from day one because he wanted to make sure he could take care of himself and never have to rely on anyone financially.

Nowadays, the benefits of a company pension plan that requires both the employer’s and the employee’s contribution are pathing the way for our long-term retirement goals. Our grandparents, and even some of our parents, never profited from employee benefits, and although these are mandatory, they have been put in place to secure our financial future.

At the end of the day, if you look at money management through the generations, there are still binding principles that hold true: set aside money for your future and borrow as little as you can. The reality is, it doesn’t matter how much money you make if you can’t figure out how to manage it.

Taken from a column in bernews.com. Carla Seely is the Vice President of Pension and Investments at FM Group. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.