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.
“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.