Personal Finance Tips from My Grandma
#2 Make budgets and stick to them like it’s your religion.
I admire my grandma because of many things. One of them is her ability to manage money. She governs her household with an iron hand, and is able to live comfortably far into retirement, mostly thanks to the firm grip she has on her money.
In her younger years, she held a job as a typist at a governmental office. When she got married, it was more or less the norm to stop working. She left the office, and took on a new position as a stay-at-home wife and mother. Her husband was the one who brought home the paycheck.
Back in the days
In the 1950s, women were considered unable to work as soon as they married someone and had to hand in their resignation according to an “incapacity” law that was in effect in the Netherlands until 1957. By saying “I do”, women submitted to the husband’s legal authority. In case of disputes, decisions about the kids, how to spend the money; the man boasted the highest word*.
Luckily, my grandma got married after this law was invalidated. To her, all the latter was discussable. She didn’t ask nor need to ask for permission to spend money. She did what she wanted and just took it upon her to manage the family’s finances, because she’s cool like that.
Opulence despite “hole in the hand”?
Oftentimes she jokes that her husband had no money keeping skills. In Dutch, we use the expression “a hole in the hand”. If you have a big, fat, gaping hole in your hand, money disappears right through it.
Nonetheless, with her, her husband had known opulence. Cars, great food, extended foreign travels. She used the incoming money and stretched every penny to wherever she wanted. This skill comes naturally to her. Every cent is utilised in the best possible way. How does she do it?
- She puts every single expense on paper on one “master overview”. She overhauls incoming money, and looks at fixed expenses that need covering.
- She makes budgets and sticks to them like it’s her religion. In rare cases where more money is needed for an unexpected expense, the funds in this (or next) month’s budget are shifted around to cover it.
- She tracks every single cent.
- She follows frugality as a lifestyle. With every purchase, she taught me to question whether I need it or not. To use what we already have, be satisfied with that, and make more with that, where we can. As long as devices are working, and they’re not slowing us down in our tracks, we keep using them. We don’t upgrade furniture to match the latest housing trends.
- She does thorough research before spending anything. This should be self-evident anywhere, especially for bigger purchases. You don’t need discipline with your finances only; you need discipline to succeed in all areas of life.
- Bills are paid immediately. Or the amount on the next one will increase and you’re losing money for no reason.
- She’s immune to Shiny Object Syndrome. New gadgets? Fancy designer clothes? The newest Super Pan Hydro Cooking Turbo Whatever? She doesn’t care.
I told grandma on multiple occasions that I think she’d make a stellar accountant. Under her wing, not a single cent gets lost. If there is no room in the budget, she doesn’t differ from it and finds a different solution.
Grandma taught me to keep the pennies in check, like she does. While I maximize my current budget allocation, I have always felt very comfortable living off very little, because I know exactly how much I can spend per area in my life. This way, I’m never stressing about going over budget, or holding my breath each time I’m about to swipe my card at the store.
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