Introduction
Recently a
group of us were having an email conversation about financial planning. As we got into some of the details about how
we made the various decisions we did, one of the members of the group, whose
opinion I highly value, made the following comment to me. “Looks like you did a good job planning. I would have done pretty much the same
thing. I see that you tried to create a
balance of risk. I think this is
extremely important.” Coming from him, I
valued that praise. As a result, I have
been thinking back on how I came to make the plans that I did. In this first part, I’m going to go back
through my early life to relate what I learned and the decisions I made.
Growing up
Our family
was certainly not rich. None of my
ancestors had ever gone to college, and none had any significant assets that
they had inherited either. I suspect
that my father made only $4000-$5000 per year when I was a young child. I know that our family property had cost approximately
$7000 back in 1946 when he purchased it and he thought that was a lot of
money. While it included 23 acres, it
was seven miles from town and there was essentially no traffic, even on the
main highway just a few hundred feet away.
I was the
first of five children. When I was old
enough to earn an allowance – in return for doing chores like setting/clearing
the table, washing dishes, keeping my room clean, etc. – I earned the magnificent
sum of $.10 a week. My sister was a year
younger and there was a five-year gap to the next child, so we were the only
ones with an allowance at the beginning.
We got our allowance on a Saturday morning and would shortly thereafter
make a trip to Martin’s – the local gas station and general store not far from
our house. They had a big wood-framed
glass case just inside the front door filled with all kinds of candy. Back then penny candy was real and some
things you could get several for a penny.
I liked things like string licorice because you could make one string
last a long time. But I would only spend
about a nickel of my allowance and I would save the rest. About once every several weeks I would spend
the entire nickel on a Three Musketeers candy bar (my favorite). My sister would generally spend her entire
allowance.
Sometimes we
would receive larger gifts – perhaps at Christmas or birthdays – from relatives. Getting a whole dollar bill was a real
treat! It wasn’t too many years later
that my mother opened a savings account for me at a local bank. Those were the days of passbook savings, so
that meant that I had my own passbook. A
couple of times a year we would stop at the bank and I could deposit some of my
hard-earned cash. It was especially
exciting when I would also get interest added – like getting extra money for
doing nothing (at least that’s how it seemed to me at the time).
I was able
to make a few larger purchases with my savings.
The only two I remember were a bicycle (which I rode from about age 10
all the way through my undergraduate years of college) and a telescope. But otherwise, I just kept dutifully adding
to my savings account. As I got older,
my allowance also got larger, growing from a dime to a quarter, then to
$.50. There were also occasional larger
gifts, in particular a couple of US Savings Bonds for $25 (they only cost half
the face value). These were written out
to my mother under the UGTMA (Uniform Gifts To Minors Act), so I couldn’t have
access to them without her permission.
High School Earnings
In high
school things ramped up a bit. I had
some after-school jobs that paid (such as working on my uncle’s state forest
fire crew) so that gave me some additional income. While I had some expenses related to these
jobs, I banked most of it, since by then I was aware that I was going to have
to save for college. With four younger
siblings, I knew that my parents would not be able to contribute much.
One year the
company my father worked for had a writing contest for children/grandchildren
of employees. They ran the contest for
three quarters, with two winners each time, and I was one of the six
winners. The prize was a share of stock
in the company – worth about $45 at the time.
So I was now a stockholder. Over
the next several years the price went up and at one time even split, making me
the eventual owner of two shares that would top out near $100 for the two. Quarterly I would receive dividend checks –
for less than $.50. My mother always
felt self-conscious stopping at the bank to deposit them in my savings account!
Upon
graduation from high school, there were a number of awards/scholarships. I won a couple of savings bonds, and also the
largest award, a check for $600 from a local company. While that may not seem like a huge amount
these days, it was enough to pay for a large portion of my first year’s
tuition.
But
graduation from high school marked the end of my years of simply earning and a
transition to years of spending – and spending faster than I was able to earn.
Chief Learning
It’s never too
early to start saving.
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