Nola Kulig
Kulig Financial Advisors
Longmeadow, MA, 01116 USA
413-565-2839
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Seven Financial Lessons from the Greatest Generation

October 17th, 2014

This month’s post is a bit more philosophical than usual. Often I provide market reviews, the latest on Washington’s background chatter on things financial, Federal Reserve policy, etc. In other works, hard information you can put to use.

But equally important to information is the mindset we bring to money. Some people can have all the money in the world, and it is never enough. Others have slender resources, yet are forward thinking and vigilant in their use; they always find a way to make things happen.

My thoughts turn in this direction this time of year for many reasons. One is that it is harvest time, the natural season of abundance. As I turn over parts of my garden and ponder the many potential uses of zucchini, celery, tomatoes, horseradish, kale, etc., etc. I count my blessings.

Another reason is my mother is now living with us. I wrote about her a year ago in a discussion on elder care. Her memory has continued to decline, although she retains her strong logic. Medication administration and other issues, including financial ones, were just proving too difficult to manage, especially with 3,000 miles between us. Eventually she agreed to come be with me and my family.

Helping her pack and move here was a retrospective on my parents’ lives and times. And many financial lessons were there as well.

Financial Lessons from the Greatest Generation

Lesson No. 1: Live Within One’s Means

The generation that had lived through the Great Depression and the shortages of World War II had no problem with this concept. Budgeting was a given and even a modest amount of prosperity was appreciated. What would seem modest by today’s lifestyle standards was viewed as abundance by those who survived hard times and eventually prospered during the war effort.

People owned one home, not multiples. Recreation and travel were simpler. Meals were cooked at home. Many still had gardens begun during victory garden days. Homes were smaller. And no one felt deprived. Perspective and expectations have much to do with how we feel about our circumstances.

Lesson No. 2: Use Debt Wisely

To say my parents were debt averse would be an understatement. My grandparents, dairy farmers at the edge of the Dust Bowl in Texas, had survived the Depression and held onto the family farm purely because they owned their farm outright (and had a very deep well).

My mother never forgot that lesson and eschewed debt her entire life. My parents paid cash for everything but their home, purchased with a loan under the GI bill. That was it. Debt management could not have been simpler.

This extended into financing college for me and my sister. My mother insisted that were simply not to graduate with student loans burdening our post-graduate lives. We afforded a very good private college by living at home. Was this what a teenager would want? No, but even we could see the excellent education we were getting. And graduating with no loans to pay was truly a gift. (P.S., Any graduate school was on our dime, not mom and dad’s. Believe me, that made you consider the decision very carefully.)

In today’s world, this may be an extreme way to manage debt, and one would have to give up those wonderful credit card offers of discounts, miles, or cash back. But unless one basically uses credit as he/she would use cash, using the post-Depression approach to debt would serve you well. And there are many ways to obtain an education.

Lesson 3: Little Things Add Up

My father worked for the federal government and made a modest salary, although benefits were good. My mother remained a homemaker, since as is often the case, jobs with flexibility for a family barely paid enough to cover childcare and other costs connected with working. So her role became stretching the household dollar, and she was very good at it.

At some point they realized that due to dad’s government service, he would not be eligible for Social Security. So he picked up additional part-time work to qualify. This was a small but meaningful addition to retirement resources over many years. P.S. Due to mom’s good budgeting skills, we always had what we needed.

Lesson 4: Home Ownership that is Affordable Yields Benefits for a Lifetime

It is a bit sad to see my childhood home sold, but it is time. At this point, it needs some work and upgrades, and unfortunately, the old neighborhood has seen better days. But mom has more than gotten her money’s worth living in the same home for nearly 60 years. It was paid off years ago, just as my parents entered retirement. And it certainly was less expensive than renting over the long haul and was a comfortable place for many years.

Lesson 5: Paying off the Mortgage is a Great Thing

Back to debt management: despite their modest resources, mom and dad were able to pay off the mortgage and live debt-free in the house for about 30 years. Their retirement was actually when they achieved the most savings in their lives and they could invest a bit. There was a small inheritance from the sale of my grandparents’ farm. Financially, life was better when they were totally debt-free.

Lesson 6: Good Health is worth its Weight in Gold

My parents were very moderate in their health routines, for the most part, although my father had a smoking habit which he fortunately kicked when he was 50. They were both active and slim, partly from working hard all their lives. Mom also had an organic garden which fed us all for years, pesticide-free, a tradition I have carried into my home life. There was no Whole Foods back then, so going organic actually saved money.

Looking back, though, I am not sure we were thankful enough for the good health we had. No one had to go on disability, and no one had any serious illnesses with the associated bills. While we certainly must have had a good gene pool to thank, I like to think that eating simply and maintaining healthy habits made a contribution.

Lesson 6: Plan Ahead for Care in Your Elder Years

This is the one area where I felt my folks could have planned better. When my father was ill for many years in his eighties, there was no real care plan in place; I still suspect they could have maximized some Veteran’s benefits that went untapped, for example. But my mother dealt with this the way she had dealt with so many things over the years and took care of him herself. And the real reason these other care options weren’t used more extensively is simply that she could not bear to part with him. This was true love in action, but very hard on her. She survived his illness, though, and also came through with her financial resources intact.

Lesson 7: Financial Security Comes from Many Actions over Many Years

The steps were: work, budget, save. Then repeat. And repeat. And repeat.

With the exception of mom’s small inheritance, there was no windfall, no lottery winnings, and no big investment home run. It was the accumulation of many disciplined steps over many years.

Result: Worry-Free in Mom’s Old Age (at least financially)

The result of all this is that even though dad’s annual salary was never more than about $25,000 a year and ended with his retirement in 1979, they were able to own a home, put two children through college debt-free and so far, avoid much in the way of nursing home bills. Mom continues to ask how her money is doing and whether she is OK now that I handle things for her. And it is great to say, absolutely, everything is very much all right.

With that, I will sign off until the next market review after the end of the third quarter. May all of you experience abundance in your lives, no matter what your resources.

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