5 Money Lessons We Can Learn From Grandma and Grandpa
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They’ve lived through the Great Depression, raised kids from diapers all the way through adulthood, worked for decades, bought and sold homes and even managed to save a bit. Now our elders are sharing their life lessons via Cornell University’s “The Legacy Project,” a survey of more than 1,200 Americans (most 70 and up) on the best practical advice they’ve absorbed throughout the decades.
Here are five money lessons we can learn from grandma and grandpa:
Avoid getting into debt
“These wise Americans say you should wait to buy everything — except for a house and an education — until you can afford to pay for it without taking on debt,” says gerontologist Karl Pillemer, the lead researcher on “The Legacy Project” and author of 30 Lessons for Living. In an era when we get loans for everything from cars to jewelry, this may seem a bit extreme but financial advisers say it’s not a bad idea.
“It’s good advice,” says Graydon Coghlan, President and CEO of Coghlan Financial Group. “You can write off your debt for a house and you typically need an education to get a job, but for the rest of it, just buy what you can truly afford.” To avoid getting into debt and start making a savings plan, use a free budgeting site like Mint.com.
“It’s also important to have emergency savings of between six months and a year’s worth of income to help provide a cushion should you lose your job or have to shell out cash for something,” Coghlan says.” Finally, having the right insurance, such as health and auto insurance, is important so an event like a hospitalization or a car wreck won’t force you into debt,” he adds.
Buy experiences, not things
While those stilettos in the window at DSW sure are tempting and that crocodile handbag seems to whisper “buy me” every time you pass it, you will probably be better off spending your money elsewhere. “This group overwhelmingly said that you should spend your money on experiences, like travel, not things,” says Pillemer.
Their instinct is spot on: Researchers Elizabeth Dunn of the University of British Columbia, Daniel Gilbert of Harvard and Timothy Wilson of the University of Virginia, found that people are happier when they spend money on things they can do, like a trip or a concert, rather than stuff they own, like a new pair of shoes or sweater.
Plan to live for 100 years
Sure, the average life expectancy is just 75.4 for men and 80.4 for women but a small percentage of people do live to be 100. While it’s unlikely you’ll be one of them, our elders say that it “can’t hurt to plan that you’ll like for 100 years,” says Pillemer. After all, if you do live to 100 but only have enough money to live until you’re 80, your last 20 years probably aren’t going to be quite as fun as you’d expected. ”This, too, is good advice,” says Coghlan.
Think small
“While big-ticket items like a brand-new Mercedes or a remodeling job for the kitchen get us salivating, we may be better off buying a series of smaller things more frequently,” says Pillemar. “These wise Americans say it is more important to enjoy simple daily pleasures and savor them, rather than holding out to buy one big-ticket possession,” he says. Again, research backs this up, with studies showing that frequency of pleasure tends to be more important to our happiness than intensity of pleasure. So, put those frequent coffee breaks with your friends in your budget!
Don’t let money rule your life
Yes, money is important, but you can’t let it rule your life. “According to the elders, a fulfilling job and life trump a higher paying, but unsatisfying. job,” says Pillemer. Go ahead and pursue your dreams of becoming a professional dog walker or working for a non-profit — just cut down on those unnecessary purchases so you can live within your means no matter what you do.
“5 Money Lessons We Can Learn From Grandma and Grandpa” was written by Cheap Chic.
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9 Comments so far
leave a commentThis is great advice. It’s amazing to see so many people buy things with debt that they don’t need. It seems that over the past few years, people are starting to realize how much debt has kept them from being able to live a fulfilling life and tied them down to jobs they don’t like. Instant gratification is something that we all need to learn how to tame.
agree!
This is good advice which at 52 I am starting to implement. I have a small car loan and a small visa bill which I am paying off ASAP. After it is paid, I will never get credit from a bank again. I am going to throw everything I have at my mortgage. I predict my 25 year mortgage will be paid in full in 12-13 years. Do not get into debt. Easy to do but hard to get out of.
Excellent post..
What great advice from those with lots of experience! We’re still in our twenties, and these are the things that we’re already built into our budget. It was neat to hear that people who’ve lived through the Great Depression recommend the same things! We prefer to focus on experiences (we’re planning a trip to Europe; I have a flexible job and found some great deals for mid-week snowboarding instruction and lift tickets), and it’s encouraging to hear that at the end of one’s life, most people recommend doing what you love and having cool experiences. And I love that thought of planning to live til your 100! Great advice and a wonderful research project!
“Avoid getting into debt” is at odds with the “Think Small” section.
This is total crap. My grandfather had a pension and only had to work 60 hours a week to make ends meet. I work 80 hours a week across 3 jobs! We live in a world where everywhere you look your are being marketed to — and not just by businesses. By your friends, family and neighbors. Keeping up with the Joneses got hooked on steroids. Police became predatory — prioritizing traffic offenses and drug-related seizures over proactively going after violent criminals — because they need your money to keep their departments functional and hitting their success metrics.
Also, it’s harder to get a job. And I don’t mean in the “I can’t find a job” way. I mean in the “your prospective employer expects you to have a super polished resume for a data entry job and squeaky clean social media presence and titular Google result” kind of way. My grandfather, who was quite mouthy, never had to contend with that.
Additionally, there’s way more ways that one is parted from their money than simply by buying things. Often it’s a medical issue that leeches all of your money. If you get a serious medical condition in your mid-twenties and have accepted a job with no health insurance or a terrible HMO or HSA plan, you’re screwed. Want charity care? If you’re not a minority, you have a very slim chance of getting it. Charity care offices are typically run by minorities in every major city, and they look out for their own. I know both first hand and from friends employed there. It’s called socialized racism; the have-nots control social services to keep those resources away from those they perceive to not need it, i.e., those not in their own cultural sphere.
Then there’s traffic tickets, rising fuel and utility costs, new “non-utility” utilities like cell phones and internet connections, more expensive and less nutritious food at the super market than in the 1970s, convenience fees, service charges, overdraft fees, electronic transfer fees and, of course, taxes (which are even better when you pick up odd jobs to make ends meet. those 1099s mean you get another nice bill come tax season).
While our grandparents may have made some great decisions, the world in which we live has changed drastically. There are both more opportunities and more complex risks and expenses. To say “don’t get into debt” is disingenuous. Even acquiring the salary to avoid debt requires a large degree of nepotism, crony-ism and general “faking it ’til you make it,” which can leave you destitute before your career even starts. My grandparents never had to contend with the multi-generational institutionalized bureaucracy that keeps bill collectors, prospective employers, businesses and insurance companies disproportionately disconnected from the human impact of their decrees and decisions.
Debt is another form of slavery. Save! Don’t spend. Pennies?? Save the ones that were made before 1982. They are made of copper and the ones after that are made of zinc. Simple research will show the value of each metal. Weights and measures, folks!
Many people I know are in six-figure debt for education. And no, I’m not talking basket-weaving majors. Lawyers are a great example, as many toil away in the shadow economy of $20 per hour dead-end document review jobs with no benefits. Education debt is not “good debt.”
Also, many people are not in debt because they’re “splurging.” They’re in debt because they don’t earn enough to pay for basics or have deficient insurance. When the emergency dental visit comes up, you’re going to use the credit card.