When I was in college, I didn’t have to worry about how to spend my money. I didn’t have any.
I worked part time as a parking lot security guard and as an in-store sales rep for Microsoft. Even with these two jobs, I was broke.
My Grandpa Pedrolie and I had a special relationship growing up. We spent countless weekends together working around the house or doing projects.
When I went away to college, we would write each other every month. This was our way of recreating those weekend hours. Without fail, Grandpa would always drop a hundred dollar bill in those letters. And without fail, that $100 always seemed to get me by on top of those part time jobs.
After graduating, I got a great job and moved to Austin. One weekend, he came down to visit with my Mom. I remember it like it was yesterday.
We headed downtown to Trulucks, a terrific, high end seafood restaurant. I had been there before for work and knew how great it was. I also knew it wasn’t cheap.
We had a wonderful time. I introduced him to stone crab claws, which covered the fish part. Then he ordered a nice big steak. The whole time I’m sure he thought he was picking up the tab. But not this time.
It was my turn. My turn to repay him for his generosity over the years. My turn to say thank you. It was my turn to use the money I was making and turn it into something more valuable.
My Grandfather is gone now, but I remember the joy in his eyes when I grabbed that bill. He understood what it meant to me, and that meant a lot to him.
What I started to learn that day is that money is a tool. It is a means to an end. The question is to what end?
I wasn’t always clear on how to answer this question. At age 40 I have a much better handle on it. It all starts with values. What you buy is what you value. But, do the things we buy always add value to our life?
Our society pushes us to work more, so we can make more, so we can buy more. What I found is that without a strong view of my values, I would end up spending money on things that I didn’t truly value.
A few months ago I sat down to list out my values. Here is what I came up with.
My Values:
- Marriage
- Family
- Freedom
- Financial Independence
- Health
- Growth/Learning
- Adventure
- Making a Difference
- Industry
- Creativity
Money is a tool I can use to make these areas better. But more often than not, money is not necessary. Here is what I mean.
- Marriage: Financial issues are a top source of stress in marriages, but money can’t buy a better marriage.
- Family: Money can work against you here. I have found that money is a useful tool to do things that bring you closer, but rarely, if ever, is it required. I’ve learned a lot about what kids value. It is time with you, not the things we buy or our surroundings.
- Freedom: I want the freedom to work and live where I want, when I want. Making more money can help, but not always.
- Financial Independence: This is a balance of spending vs. Earning. It is a constant struggle. I have found that if I set specific targets and goals, it is easier to make the daily decisions about how I spend vs. save.
- Health: I don’t need money to be healthy and money won’t buy health.
- Growth/Learning: Money can help me buy audio books or online course, but I could also go to the library.
- Adventure: We do spend money here. This is one of our family core values. Of course, there are a lot of things we do that don’t cost a dime.
- Making a Difference: Money can help, like it does for the Hurricane Harvey victims. But time and talent is just as valuable.
- Industry: This is a fancy way of saying work. Work is important to me. I want to add value to others around me.
- Creativity: This is something inside you. How you use it is what matters. Money is worthless here.
Time is the next important consideration. Early in my career, I didn’t put enough value on time. I never considered what it was costing me to earn my paycheck. I gave up things that I wish I could have back, but I can’t.
There are extreme examples of high-paid CEO’s that quit their jobs because of time. One in particular, got a letter from his daughter of all the things he missed in her life because of his job. I never want to be that father.
When it comes to making or spending money, we always have a choice. It may not feel like it, but we do. What you are feeling is the difficulty of the choice. Not if a choice exists.
One thing you can do is save money on the things that don’t add value, so you can spend more on the things that do. These start out as hard decisions, but become habits and easier with time. When you are saving, keep in mind the purpose. The goal is not to collect more. The goal is to add more value to your life.
I work hard to save. There are a lot of small things you can do that add up over time. Here are a few ideas to get you started.
- Utilities
We cut the cord on cable three years ago. This was a big one. I bought our high speed cable modem, instead of leasing it from the cable company. I zero-scaped half of the yard to cut down on our water bills. Five years ago, I installed solar panels to cut down on our electric bill. When you add it all up, it saves us $3,500/year. Note: It’s been five years since the solar panels went in and they have now paid for themselves. - Home & Car
I refinanced one of our cars and I’m going to replace my car with a cheaper one. We cut the cost of our life and car insurance, without losing any coverage. This is another $3,000/year. - Entertainment
There are a lot of little things that fit in here from magazine subscriptions, to Hulu, to eating out. We didn’t cut everything out, we cut back. This is another $1,200/year - Free stuff
Any time possible, I’ll use airline miles or hotel points. I’ll even buy unwanted gift cards to save on purchases I have to make. Sites like Gift Card Granny can help here. This one ranges, but can be over $3,000/year. - Taxes
We make a lot of donations throughout the year. Not only does this help the less fortunate, but it lowers our tax bill. We also put pre-tax money into a 401k. We are saving for the future and lowering our taxes today.
One last lesson I’ve learned. Don’t let how other people spend their money, determine how you spend. I’ve found that when you do this, you are letting others set your values.
Spend your money however you like. But be sure, you like how you spend it. There are too many times I look back and see that I’ve spent my hard earned money on things that don’t provide true value. Don’t repeat my mistake.
This post is part of a series of letters to my kids. My goal is to reflect on and capture as many life lessons as possible. Here is the current list I am working from.
