One of our favorite parts of Woven by WPF is the stories from our Mission Supporters. When they join the community, these members share a bit about themselves and their money story. We learn about past money mistakes and current triumphs. We learn about how much their parents may have taught them about money growing up, or how little. Sometimes we learn about what brought them to WPF. And we realize how much and how little we share when it comes to our personal finance journeys. They’re a great reminder that no matter your money story, you belong here with Women’s Personal Finance.
Because we love these stories so much, we asked one member to give us an expanded version of their person’s Member Story. Thanks to her parents, she’s well on her way to FIRE (Financial Independence, Retire Early) by her mid-30s. While not all of us (myself included) can have the option of retiring that early, the money wisdom she shares here is a great starting blueprint – for yourself, or for your children.
-Angela, WPF Editor
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Frequently in the personal finance space you hear parents asking, how do I teach my children about money? How do I set them up for success? And it’s wonderful to see more and more people abandoning the taboo around money. This is one story about how one family set their children up to be prepared to make the most of their money as they grew up.
Now I’m not going to pretend to try and give parenting advice, but I am in the privileged position of having been raised by parents who included money matters on their list of Things My Kids Should Learn and I have reaped substantial rewards from that knowledge. While all my wildest dreams are still in progress, I’d like to share my story as one example of the impact that can be made by some knowledge, guidance, and a halfway decent mindset.
As the phrase goes, don’t let perfect get in the way of progress. My parents didn’t have an instruction manual or all the answers, and still I attribute a huge part of my financial progress to them.
In the 8 years since graduating college, I’ve been able to pay off my car, take multiple international trips, save over $300,000, and self-fund a 10-month mini-retirement.
Early Money Mindset
From an early age my parents taught us about saving money. It took many different forms, spanning everything from opening kids savings accounts at the local credit union to shopping at thrift stores, from taking road trips instead of flying, and encouraging us to get summer jobs. All of these experiences created in me a mindset of saving and being intentional with money.
I remember when, after being introduced to the concept of credit cards and loans, I declared that I would never take on debt. Instead, I was going to save up and pay for anything I wanted with cash. I’m a little more pragmatic about it today, but the aversion to debt has stayed with me.
Preparing Children for the Financial Implication of College
We started getting into more money strategy as we started talking about college. I was lucky enough to thrive in the American education system, so college was always the plan.
My parents had accumulated a tidy sum in our 529 plans, but they were clear that it was for books, room, and board and wasn’t intended for tuition, which would be covered by an in-state scholarship. They stressed the advantage of avoiding student loans and the quality of our in-state schools, and in the end I was happy to get the most bang for my buck.
Admittedly, I may have taken the message a little too much to heart when I called them in a panic mid-semester. One of my classes wasn’t going well and I was terrified at the prospect of losing some of my funding and having to take out a loan of any size. They helped me step back and see the big picture, reminding me that all I can do is my best and that if I did have to take a $5,000-10,000 loan it wouldn’t ruin my life.
That moment of support and perspective has been a core memory for me ever since. In the end, no loans were necessary and I was officially on the fast track for the next phase, saving money as a professional. (Dealing with the student loan payment and interest restart? We had certified student loan counselor Kat Tretina come talk to us on Woven about what to do. You can watch that replay here)
College Graduation – Now What?
Remember how I said I was never going to take on debt?
While attending college in my hometown, I didn’t take much convincing to agree with my parents’ suggestion that a car on campus was not worth the $600/year parking fee. It was only after graduation that I started thinking seriously about purchasing a car.
This was one of those experiences where my parents’ lesson was as much about the value of money as navigating financial processes. While in college I’d often borrowed their car when I was home for the holidays and I loved it, so naturally my first thought was to buy it from them. (Ever since we first began learning to drive, it was made clear there would be no freebies.)
They were amenable to the idea and laid out their offer: full Kelly BlueBook value. I’ll be honest, I was a little disappointed to not have some level of discount, as frugal me wasn’t excited about the $17,000 price tag. That said, this experience really hit home the value of money. It taught me that there is a balance to supporting those you care about, and not selling yourself short when the need isn’t there.
I had accepted a well-paying job offer and would be able to get a loan with a good interest rate (thanks to a good credit score from being added as an authorized user on one of their credit cards for an overseas trip). The sum they were asking was well within my financial abilities and a fair value. And so, remembering that they still had their own retirements to fund and a replacement car to buy, they asked for it.
What to do once you have money?
Now I had a new job, a car to get me there, and more money than 21-year-old me knew what to do with. I had set myself up to follow their mantra of “live within your means”, so next up was figuring out what to do with what was left.
My dad’s next advice was clear: save now and save smart. He bought me a copy of “All Your Worth” by Elizabeth Warren & Amelia Warren Tyagi, which recommended a strategy of splitting your expenses so that 50% went to Needs, 30% to Wants, and 20% to Savings.
As to where to put the 20% savings, he had additional details. This is the one area where I got to benefit from his mistake. As a young man he’d put some money in a Roth IRA, only to withdraw it a few years later. He’d often regretfully comment how he didn’t want to know how much it would have grown if he’d left it alone.
He made sure I opened my own and understood the benefits of long term compounding. Of course, this was for extra savings after I contributed to my 401k. Because that was step 1, making sure I took advantage of the free money (little though it was) and was fully set up to forget about it for the next 40 years.
With all this information passed on, inadvertently planting FIRE (Financial Independence, Retire Early) seeds along the way, their little bird left the nest. Even then, I was grateful for their guidance and support.
Looking back 10 years later, that gratitude has grown more even than my accounts. Even if I had never moved beyond 50/30/20, I would still have been set for a very comfortable retirement before age 65. As it happened, their knowledge allowed me to ask questions like “What if age 65 is too far away?” and to run headlong after the answers I found.
So I’ll end by saying, thank you Mom and Dad. Deeply and eternally, thank you <3