This week, we’ve got another great guest post; this one from Jacob Merkley at PowerOverLife. Jacob’s going to share some great lessons he learned from his grandparents about what not to do with your finances.
Beyond being a great financial writer, Jacob is also an impeccable speller. Did you know that “Noes” is the correct plural of “No”? I’m a fairly good speller, but even I had to look that one up!
Read on to learn the biggest no-noes Jacob says you need to avoid if you’re listening to the lessons of our elders.
I don’t know about you, but I am extremely fond of my grandparents. Both sets of grandparents were awesome; they were intelligent, made great decisions, and had good financial sense.
Your grandparents were probably the same. Many of our grandparents were born in the early 1900’s, which was a specific era of American development. They worked with their hands and employed their minds to capture a bright future for them and their families. Many of them lived through the depression, where “use it up, wear it out, make it do, or do without” was the motto for the time.
A Small Tribute - Grandpa Merkley
Out of all 4 of my grandparents, my Grandpa Merkley was the best with his money. He was naturally good with his hands, as well as his pocket-book. By day, he worked at a factory, which produced drywall. He was recognized (and given a very nice bonus) for finding an improved way for the machines to work together, saving the company thousands each year.
By night, he often did side hustles to help his family get financially ahead. He owned and ran a mechanic shop, sold insurance, owned real estate, and was even the first one in the county to own a cotton picker (My grandma yelled at him for making such a big purchase, but was smiling once it made them money)!
He understood that to get ahead, he had to work hard; no short-cuts. Because of that attitude, he provided for seven children, was able to give money to those in need, built a cabin, and lived through his retirement years comfortably.
4 Financial No-Noes
My grandpa loved to give advice. If he was still alive today, and he knew about the bad financial decisions I’ve made, I believe he would sit me down and give me a piece of his mind. Here is a list of 4 no-noes that I believe he would have told me to help get my finances back in order:
1. Don’t Go into Debt for a Car
Today it seems like having a car has become a “need” (it’s not, in case you didn’t know)! I have gotten to work on time, just like everyone else, by using my bike and public transit. The notion that having a car is a “need” is pretty ridiculous. What’s worse, is that we live in a society that has also deemed it appropriate to go into debt to have one.
Get this…car loans have now topped $1 trillion (USA Today). We have a huge debt problem in the U.S. and cars are a large part of that problem.
I don’t want to be the car scrooge here. I love having a car, and in many instances, having a car can help you make more money and save more time. However, my grandpa never went into debt for a car, and neither should you!
- Alternative: Here’s a thought…why not actually save up before you buy your next car! I know…crazy, right? If you are going to go into debt for a car…why not buy a $5,000 car instead of a $40,000 car? Other than the occasional fix-up (and not having the butt warmers) that $5000 car will still get you to work!
2. Don’t Buy Brand New Clothes…Too Often
There is a running joke in my family that my grandpa never went inside a clothing store his entire life. I don’t exactly know if that’s true, but I really believe it. I never saw my grandpa in new clothes (other than his suit when he went to church). He was always wearing used clothes and he was fine with it.
In my family, if we had a hole in the pants, we got a patch job; if they were too long, my mom would hem them up. I had hand-me-downs all of my life. My parents refused to spend a lot of money on our clothes, and you don’t have to either.
It makes sense to buy new clothes every once in a while; I get it. But collectively, we all spend way too much on brand new clothes. Even if my grandpa did go inside a clothing store, I can promise you that it wasn’t a store that sold brand new clothes.
- Alternative: Go check out garage sales or your local Goodwill. You can find awesome, gently used clothes that are incredibly cheap. Also, consider learning how to sew. Stretch your current clothes out until you literally can’t wear them anymore!
3. Don’t Pay for Entertainment
OK…I know I’m probably going to pull on some heart-strings here, but you are spending too much for entertainment… Netflix, Hulu, Pandora, Spotify, internet, TV, Amazon Prime, etc. That’s not even mentioning how much money and time we waste on smartphones, social media, and other electronics.
If you were to calculate the amount of money that you spend in one year on things that purely entertain you, I think you’d be shocked.
You want to know what my grandpa did for entertainment? He went outside (I know…jaw dropping!). He read a book. He played games with his family and friends. Low and behold…they’re pretty much all free (or low cost).
Again, I’m not trying to be the guy that everyone hates here… But if you didn’t spend so much on entertainment, and instead put it into your savings account, you might actually be able to pay cash for that new car you want (and you wouldn’t have to go into debt for it).
- Alternative: Grab a book, go play outside, talk to each other once in a while, and find other things to entertain yourself that are FREE and not in front of a screen.
4. Don’t Forget About Retirement
This is probably the biggest no-no on the list. My grandpa lived large in his retirement years and it’s probably because he didn’t go into debt for a car, never bought new clothes, and rarely spent money on useless entertainment. Retirement was a budget item for him, and he would tell you to do the same thing! He recognized that he needed to save for it and so he skimped and sacrificed so that he never fell behind.
Most of us are behind on our retirement planning…and it’s a big mistake. Compound interest is a magical thing…let it do its thing!
- Alternative: Make retirement a budget item again. Make it a priority. Contribute as much as you can, each year that you can. If you are willing to make sacrifices now, you will thank yourself in your retirement years.
I would imagine that many of you had great grandparents…and if you didn’t, then I’m sure you had another adult figure that has influenced you over the years. I recognize that we are living in a much different day and age than our grandparents, but that doesn’t give us an excuse to handle our finances any different than they did!
Don’t go into debt for a car, don’t buy new clothes, don’t pay for entertainment, and don’t forget about your retirement. Those are four no-noes that I believe my grandpa would give me to help me get my finances back on track, and quite frankly, it’s just good sound advice.
After spending six years in the accounting, retirement, and financial realm, Jacob turned his attention to teaching others about important life skills. He works with clients one on one, in addition to teaching others through his website PowerOverLife. Jacob currently lives in Gilbert, AZ with his wife and one-year-old daughter.