Millionaires and Paupers Taught Me About Money

Millionaires, Paupers, and Those In-Between:

10 Lessons I Learned about Wealth from my Family

By Jackie Holycross, Acts 3 Dream Catchers Ministry

I have had relatives who were wealthy, with multiple houses and a Cadillac in the driveway. I’ve also had relatives who were poor who couldn’t pay the electric bill and didn’t visit because they couldn’t afford the gas to drive over.  Despite their differences, each and every one of them taught me valuable lessons about money.

1) Money does not grow on trees. ​ This was my father’s mantra while I was growing up. He wanted me to know that all the things I wanted him to buy cost money and that money came from hard work.  I can still hear his voice in my head when I start to buy some expensive item I don’t need.  With my own children, I try to equate the cost of a desired object with how many hours they would have to work at a minimum wage job to pay for the item.  Like my dad, I don’t want them to think their toys and clothes just fall out of the sky.  Maybe I was listening all those years ago.

2) Saving is important. ​ When I was very young, my dad walked me down to the bank and opened a savings account in my name.  I remember the green book with all the lines for future deposits.  Every time we went to put money in, I was amazed that they added in a few cents more.  Dad explained this was interest, the payment the bank gives for being able to use your money.  To me it was just free money, like a gift every time I went to the bank. Later I would learn the real gift of savings – security.  Most Americans have very little, if any, savings.   As a result, when something unexpected happens, like a broken appliance or unexpected medical bill, they have no funds to cover it.  This is when people rely on credit cards and loans.  This creates a downward spiral of debt and financial ruin.  Having an emergency fund in a savings account can help protect families from this type of disaster.

3) Avoid debt. ​ This lesson I learned by watching my mom struggle.  When she remarried, my stepdad had a lot of personal debt.  On top of that they decided to buy a house rather than continue renting our apartment.  This left us with very little disposable income.  We ate hot dogs with macaroni and cheese almost daily.  My clothes came from donations and thrift stores.  There was no money for eating out or any other extras.  Some people think that owning a house is always a good investment.  However, when a person in not financially ready for a mortgage or for the upkeep costs of a house, it can become a burden of debt that weighs them down.  The only time my mom splurged was at Christmas.  That’s when the credit cards came out.  They also got used whenever there was an unexpected expense like a broken appliance or car repairs.  My mom and stepdad both worked full-time, but they never earned enough to get ahead.  They chipped away at those bills every month, but debt was the master.  I remember the night we sat in the lobby of a loan office waiting to see if we would lose our car because of missed payments.  I never want to live with that kind of fear again.

4) Financial security demands sacrifice.  ​When my mom got really serious about kicking debt out of our lives, she made some choices.  She got a second job, and she quit using credit cards for anything.  This meant no giant piles of presents the next Christmas. This was a sacrifice for Mom because she loved giving people things and seeing their smiles.  That year she bought several small, cheap things so I would still have multiple packages to open.  Then she made the season special by baking cookies with me.  What I did not know is she scoured her cookbooks to find recipes that only included ingredients we already had.  Christmas day she pulled me aside to see if I was disappointed in our first non-credit Christmas.  I was so confused.  I thought it was the best Christmas ever!

5) Never pay full price.  ​OK, never is pretty extreme, but all my money teachers knew how to find a bargain.  My dad loves to search through yard sales for good deals and then haggle the price down even more.  This is a man who can afford new clothes, but chooses to wear holey jeans because he “hasn’t got his money’s worth out of them yet.”  He taught me that buying something you don’t need is wasteful.  My rich uncle who built his own business into an empire chose to shop at outlet malls.  Why pay full price if you can get the same quality for less?  As a teenager I was mortified to have to shop at thrift stores.  Now I brag about the deals I find there.

6) Invest wisely. ​ When my grandfather was getting older, he decided to gift away inheritance money to his children and grandchildren.  He met with me and my husband to teach us about investments.  He explained that when he was newly married and got his first raise at work, he decided to invest it rather than increase his level of spending. He figured his original salary had been good enough so far, it would continue to cover his needs.  The rest of each check was put away for the future.  This was not put in a savings account though.  He wanted a much greater rate of return than that.  Instead he invested in mutual funds.  He explained that buying individual stocks is risky.  Any company can falter.  Mutual funds, though, invest in hundreds of companies.  Some grow and some shrink, but traditionally the market has averaged in the positive direction over time.  It took me awhile to apply what he was trying to teach me.  I actually used his gift to pay moving expenses when I got a job offer in a distant state.  However, with that first job I started a 401(k) plan.  I had a small amount taken out of each check and invested.  It took time, but eventually the fund reached and surpassed the amount my grandfather had originally wanted me to invest.  I would like to think he would approve of my current portfolio.

7) Real estate is not for everyone. ​ My dad can fix anything in a house.  He does plumbing, electric, walls, flooring - everything.  After fixing his own house, he decided to buy another beat up one and fix it up to rent.  Many people have prospered by flipping or renting houses.  However, my dad is a perfectionist.  He didn’t want to just fix a house up to good enough. It had to be amazing.  He did eventually get that second house to a point where he was willing to rent it out.  Then he decided to try again with a third and fourth house. One of these houses had more problems than he anticipated and it never did get fixed up enough to be rented out.  The other one became a nightmare of unruly, demanding tenants.  This was way more stress than it was worth.  You have to have a certain personality to be a landlord.  If you don’t, it’s not a good investment.

8) Be generous. ​ Like my mom, my stepmom loves to give gifts.  She enjoys searching for just the right thing and watching the bright-eyed smile on a person’s face when they open it.  She gives freely and lavishly.  It gives her joy.  I read about a social experiment that supports this idea.  Researchers gathered two groups of people and gave each participant $100.  The people in the first group had to spend the money on themselves.  The people in the second group had to spend it on others.  The participants rated their happiness levels before and after the experiment. The second group was much happier at the end.  It was more fun to spend the money on others than on themselves.

9) Money won’t make you happy. ​ No matter how much our society denies it, money is not the guarantee of happiness.  My uncle who owned a vast company was plagued by alcoholism and his children made choices that saddened him.  Money did not insulate him from the tragedies of life.  On the other hand, my stepmom focuses on the things she loves in life.  She loves family and traveling.  Money is a tool to help her accomplish her goals, but it is not what she focuses on, and it is not her joy.

10) Wherever you are on your financial journey remember to listen to the gurus around you.  Growing up, I did not always recognize or appreciate the lessons people were teaching me.  It’s only in retrospect that I see how valuable their wisdom has been.  You too can learn from both the mistakes and the successes of those around you.  Everyone in your path has something to share.

You don’t have to have a degree in finance or be a millionaire to find financial security.  Anyone who is willing to work hard and follow these principles can fulfill their dream.

Never quit learning, never quit striving, and never quit dreaming.