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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.
September Checklist:
• Begin preparing the applicable safe harbor notices to employees, and plan for distribution of the notices between October 2 and December 2 (calendar-year plans).
• Distribute the plan’s Summary Annual Report by September 30 to participants and beneficiaries, unless an extension of time to file Form 5500 applies (calendar- year plans).
• Send a reminder memo or email to all employees to encourage them to review and update, if necessary, their beneficiary designations for all benefit plans.
General financial education, in addition to education specific to 401(k) plans, can encourage employees to save more for retirement. Topics like budgeting, debt management and reduction, and finding ways to save on household purchases may allow employees to feel more confidence in contributing more of their income to the plan. In turn, that can lead to improved retirement readiness. (more…)
The dust hasn’t yet settled, but a few things about the new tax law seem clear. Employees will likely begin to notice a difference in their paychecks as early as February, and some projections put the average worker’s additional spendable income at about $2,000 per year.
The upside of using auto-enrollment (and auto-escalation) features in a 401(k) plan are considerable. Participants in plans that use auto-enrollment seldom opt out, even when they are enrolled at 6% to 10% of pay. This has resulted in many new participants saving for their futures. Recently, though, a study was done that suggests people who are automatically enrolled in their plan may take on more debt than they would have otherwise.
Spending your retirement in comfort depends largely on what you and your spouse do today.
Retirement, like marriage, comes under enormous strain when money is constantly an issue and recognizing this sooner rather than later can make the difference between traveling and living out your years together in relative comfort or having to scrape by for years as you get older and less healthy. It’s a pretty stark contrast.
Here are five things to avoid with your retirement today:
1. Not saving early or often
It’s the little things that add up. While you may think there’s plenty of time between your current situation and retirement, saving now means you won’t have to catch up later, when you may face other issues or unplanned expenses. It’s also the single most effective habit you can develop: saving a little bit all the time.
2. Underestimating your needs and lifestyle (more…)
