Like father like son, like mother like daughter

How many of us realise that our financial habits are a reflection of our parents' own habits?

Follow daddy and mommy, okie?
Our parents are arguably one of the most influential people in shaping our behaviour towards money. Some of your parents may adopt a frugal and prudent approach towards money. Some of your parents may adopt a let's get the lifestyle we want based on instalments, deferred payment or credit. Whatever is our parents' attitude towards savings, spending and investment somehow trickles down towards our very own ways that we manage our own finances.

My own parents
My own parents gave me one of the greatest gifts without realising what they did: the gift of frugality. Both of them grew up in very modest backgrounds where the father was the sole breadwinner while the mother was a home-maker. In the case of my mother, her childhood was even more harsh as her mother (my maternal grandmother) passed away when she was young and she had to take on the household chores of cleaning, cooking and washing when she was all of twelve years old. This instilled in her a fierce determination and discipline to make a better life for herself by working hard for the same employer for 30+ years and retiring.

My father who was originally from Malaysia, came to Singapore to build a better life and also worked hard with the same employer for almost 40 years before retiring. Both of them saved and scrimped for our family to have a better life and we did thanks to their sacrifice and love.

Thrifty habits
I remember when I was young, my mother would say she doesn't like to eat this or that when the dishes for the family meal was not sufficient as she had cooked just about right for our family dinner. She would willingly go a bit hungrier so that I could eat more instead of cooking another dish that would use up water, gas and meat/veggies. My parents both kept very frugal habits, for most of their lives, they lived without a car and our family homes were always well within the affordable limits of their combined salaries.

Now that I am all grown up with a family of my own, their frugality has filtered down to me. Relatively speaking while my lifestyle habits would be considered lavish by their standards e.g. a cup of coffeebean coffee on occasion while they would do with the simple kopitiam kopi-O for their caffeine fix.

Enduring good financial habits
I have adopted many of their frugal habits such as not spending beyond my means. Always saving a portion of my income and a more conservative approach to investments in my early years through fixed deposits and savings. This had allowed me to protect my investment capital although it did not fetch me spectacular returns early on in my career. The dividends from this approach paid off when I bought my own home as I could afford to invest more of my savings into home equity rather than borrow 80% from the bank. As a result, I am very lowly geared and am overall in a positive networth position after working for a decade plus.

In addition, I eschew consumer debt and pay off my credit card bills in full at the end of the credit terms. I reward myself with little luxuries in life when I make realised gains from my time deposits or stock market capital gains. I typically allow myself to spend 10% of the gains and lock in the rest for other investments such as treasury bills and equities.

A living legacy
My parents also taught me never to keep up with the Lims, Alis and Rajahs in our community as that was the quickest way to financial difficulties. While now I am better educated and well-versed in finance and investments than they ever were, my parents (especially my mother's) wisdom in money is a living legacy I will carry on with me and pass it on to my future generation. What they have given me is immeasurable and I am thankful for their wisdom, patience and love.

What is your own legacy?
What is the legacy that your own parents are leaving you in terms of your attitude towards money. As you examine your own approach and behaviour in managing your own finances, do you realise you are doing the right things which they did or are you repeating the mistakes that they did. We can all learn from the past and begin to take control of our financial destinies because it is not cast in stone.

My approach to ultimate financial freedom has been to:

1) Live within my means
2) Save and invest
3) Grow my means
4) Repeat 1

It can be achieved, one realistic step at a time.

Be well and prosper.