How I learned about money

I learned about money by listening to my parents. They were the best financial teachers any kid could have had. My dad, Ray, is the son of a Scottish immigrant. He grew up in London, Ont., in a home where money was scarce. My mom, Barb, is one of 10 kids, so she also knows what it’s like to make ends meet with very little money. They married when they were just 17. Less than a year later their first child — my sister, Lisa — arrived. Mom and Dad had no education, no family money to fall back on. Anybody who knew them back then would probably have bet a bundle that this pair of teenage parents would never amount to much. But Mom and Dad knew how to work and they were determined to build a better life. They succeeded. Ten years ago, when they turned 53, they retired to a million-dollar home in the Okanagan Valley of British Columbia. They reside there today, living off a couple of small employee pensions and a bulging stock portfolio. They golf, they dine in nice restaurants and they garden. Most of all, they like to sit on their deck, sipping wine, and looking out over the lake. They accomplished all of this by doing some simple things really well. They never made a bundle on a hot stock, never earned huge salaries. But they lived below their means, saved regularly, and got value for their money. Perhaps the most important lesson they taught my sister and me was not to put artificial limits on yourself. Dad started out as an assembly line worker, but he didn’t see any reason to wind up there. I recall being seven years old, sitting in the back of our beaten-up old car, my parents chatting up front. Dad said, “It’s not what you make, it’s what you do with it.” Mom nodded. She was working as a bank teller at the time and she listed all the people she knew who made loads of money, but had little to show for it. My parents were determined not to waste a penny of what they earned. We lived frugally. We never ate out. We drove the worst cars in the neighborhood. My mother had to be wrestled into buying herself something new to wear. The moment that my parents had an extra dollar, they started to invest in rental properties. By the time I was nine, I could chatter on about “curb appeal.” I loved saying “location, location, location” and “buy the small house on the big street.” My parents always bought places in need of repair, and they made a nice profit by fixing them up and selling them. They made a lot of their real estate profits in the initial negotiations. We would pull up to an open house in our rusting clunker of a car. Based on our less than prosperous appearance, the real estate agent would ignore us. My parents were happy to encourage the impression that we had no money. Later, I would sit at our kitchen table and watch as they negotiated with the agent. My parents would shake their heads at the impossibility of whatever price the agent was hoping to get and, in return, suggest they might just be able to afford the house if the price could come down by, say, 20%. If they couldn’t get the deal they wanted, they would walk away. There were a lot of lessons there for a young kid. I learned that you should never fall in love with what you are buying. I learned that the person who is prepared to walk away from a deal has an amazing amount of power. And I learned that just about anything can be negotiated. My parents bargained on everything — cars, furniture, appliances, you name it. Even as a child, I was amazed to see how many other people didn’t do the same. Mom would talk to the clerk at the hotel desk and, in a few minutes, get us a room on the water for $100 a night; meanwhile I could see another family agree to pay $145 a night to overlook the parking lot. My parents were always polite about asking for a deal — there was never any shouting or bickering. But simply by asking the salesperson, “Is that the best you can do?” they would often get 20% off. It was as if the salesperson was waiting to see if they would ask for a discount. Dad taught me that posted prices mean nothing when we went shopping for a shuffleboard. We learned that a used furniture store in the industrial end of town had one for sale. As we approached the door, my dad said “Let’s not go right to it.” I knew immediately what he meant. We walked in the store and began looking at old lamps and antique chairs. One of the salespeople started eyeing us. As he began to move closer we moved toward the shuffleboard. My dad sniffed. “Look at this old thing,” he said. “You enjoy shuffleboard?” the salesman asked. Dad smiled and said it had been a long time since he had played. Then he reached down, grabbed the price tag and looked at it: $350. He dropped the tag as if in shock and moved on. The salesman said, “We may be able to move a bit on it.” Dad replied that he would have to move a lot and, anyway, we had no way to get the table home. The salesman assured us they could deliver and asked my dad to make him an offer. At this point, I thought I had my dad figured out. We would offer $150 and end up spending $200 with delivery. This was when I realized that I still had a lot to learn. “The best I could do is a hundred bucks,” Dad said. “And I’d need it delivered for that.” I almost choked. Had Dad gone too far for once? The salesperson chuckled. He said he had to check the books and would be right back. Moments later, he returned and told us that we had ourselves a deal. We gave him $100 cash, and went home to greet their delivery guys and play our first game. During the match, I asked my Dad why he had made such a low-ball offer. He told me that the shuffleboard was taking up too much space in the store and he knew the owner would want rid of it. As much as Dad liked getting a deal, he was more concerned about getting value. He wasn’t going to buy something he didn’t need simply because it was cheap, or invest in something he didn’t understand because it seemed inexpensive. He would remind my sister and me that we should never make “the big mistake.” What was the big mistake? It could vary, he explained, but you should always be wary of anything that looked too good to be true. My parents wouldn’t risk their savings on anything that wasn’t rock solid. When my sister and I were young, we all lived, as much as we could, on one of our parents’ salaries while they invested the other in Canada Savings Bonds. Later they bought stock through employee stock buying programs that offered to match whatever amount they contributed. As the years went on they branched out into buying blue-chip, high-dividend stocks. It’s the most conservative investing strategy you can imagine — but their small contributions, made over the years, have given them a portfolio that, in combination with a couple of small pensions, produces enough income for them to live on. The one area where my parents were willing to take on risk was betting on themselves. Just after they were married, Mom and Dad were sitting in a fast food restaurant. Dad was working on the assembly line and he wanted more. When he saw a truck drive by with a logo from a large gas company, he said to my mom, “If I could get in that company and get into sales, we’d be laughing.” Several years later, he did get a job with the gas company — changing the oil in the fleet cars. He gradually worked his way into a supervisory job and then he saw the posting he had dreamed about so long before. A sales job was up for grabs. He discussed the opportunity with Mom. She was concerned that we would now face the risk of living on an unreliable and unpredictable stream of commissions. But Dad told her not to worry. He couldn’t guarantee that he would be great at sales, but he could guarantee that he would outwork the others. He applied and got the position. His income shot up and he spent the last 13 years of his career making by far the biggest paycheques of his life. It was proof that you shouldn’t put limits on yourself. Looking back, I’m sure that other families thought my parents were cheap when I was growing up. But that was true only in one sense. They were cheap with themselves. They were generous with those they loved. When my sister and I walked down the stairs on Christmas, the gifts covered the floor. At any time of the year, if a friend or a relative needed a place to live for a few weeks or even months, my parents welcomed them with open arms. In fact, many of my friends felt that my parents were their second parents. As they got older, my parents began purchasing nicer cars and gradually improving their lifestyle. But they treated themselves only when they had reached a goal they had set. Even then, they were careful to keep things within reason — their new cars weren’t Porsches, they were vehicles like a Ford pickup truck or a Honda Accord. And they always paid for them in cash. They have never taken out a car loan in their lives. Our parents made it clear that they loved my sister and me, but they weren’t going to spoil us. We were expected to pay our owntuition at university and we did so by holding down part-time and summer jobs all the way through our schooling. My parents were happy to help us out with living expenses and they would have loaned us money if we needed it, but the lessons that my sister and I learned as we grew up were worth a lot more than a few years’ tuition. I know some parents don’t like to talk about money in front of their kids, but I think that one of the greatest gifts my parents gave us was allowing us to sit in and watch them make financial decisions. The lessons we learned continue to pay dividends. My sister is a school principal. She drives a 15-year-old green minivan which is, by far, the most hideous vehicle on her block. But she drives it to her million-dollar, mortgage-free house in the Okanagan. She also owns a condo in Central America. I’m 37. I work as a manager in a non-profit organization; my wife works with kids. We make a middle-class income, but we already have a healthy investment portfolio and thanks to a habit of frugal living, we recently paid off a modest house in an Ottawa suburb. Following my Dad’s example, I doubt that we paid full price for anything in the house. When I see something I like in a store, I’m always polite, but I always ask, “Is that the best you can do?” or “It’s a bit more than I had expected to pay. Can you help me out?” The salesperson is usually happy to do just that. My wife and I are expecting our first child. I look forward to spoiling him with love and passing on the lessons that my parents taught me. The first time I hear him ask a salesperson, “Is that the best you can do?” I’m going to smile, because I’ll be able to hear Dad’s voice.

How I learned about money

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