My granddaughter asks me how it is possible to be rich when times are tough. She wants to know now so she can incorporate that knowledge into her own life at a young age. As a Dutch immigrant family, we came to America penniless. The war destroyed most of my father’s farm. My parents had four kids, and when they arrived in Bellflower, California, they had $300.
We’ve never heard of Benjamin Franklin, but we live by his dictum “a penny saved is a penny earned”. We picked up empty soda bottles and returned them for two cents, which went into a family savings account. Cakes and ice cream are reserved for birthdays and special occasions.
I thought my parents were “tight,” but as I matured, I realized they were frugal. They plan for the unexpected and use their money to help others. Being “tight” borders on selfishness, while being frugal is about making a better life for your family and others.
We discussed that times are different now, but the principles are the same. At the time, a starter home was selling for $15,000 with an interest rate of 5.7 percent. My income is $400 per month.
The first thing I tell my granddaughter is to never spend more than you earn. Use only one or two credit cards and pay them off each month.
Second, money is earned through work. Earning money means that your money can be used to increase your assets. Creating investments takes real discipline.
Most of these truths came to me after I got married. It was then that reality told me that I was now responsible for my wife and future children. I need to learn how to stand my ground. We start by putting our paychecks in the bank, paying our bills, and spending the rest on the things we want or think we need. Things change when we decide to set aside a part for God. Then we set aside ten percent as savings. Then we paid the bill.
We no longer buy new clothes just to look stylish, but only when we need them. Shoes are bought off the shelf. We brought lunch and stopped buying from food trucks and going to cafes. We go out once a week for cheeseburgers, fries and coke.
We pay our taxes and don’t invest in IRAs until we have savings large enough to invest. The investment is flexible, while the IRA continues until age fifty-nine and a half. A balanced portfolio includes real estate and a combination of stocks, bonds, or mutual funds that we invest in when we start an IRA.
In 2013, I attended the retirement party of an employee who had been with the manufacturing plant for 35 years. His top salary is $12 an hour, but he also cares for a family of six. He retired at age 60 with a portfolio of over $1 million. He does this by spending less than he makes, and setting aside a portion each week to buy stock in the company he works for.
Frugality allows us to take our kids to national parks in the western states, fish and hike in Yosemite and the Grand Canyon, and visit our family roots in Holland.
You can indulge yourself and live paycheck to retirement, or you can save and invest frugally so you can look forward to a comfortable retirement and the ability to help others.
It is very important to teach children the value of money management at an early age. This will enable them to live in peace with God and people.
Albert van de Steeg has lived in Chino since 1959. He and his wife, Cindy, are co-founders of Food for Life Ministry, Inc. He has written two historical novels: The Canopy and Winter in Holland.
