The best financial tip I received was given to me by my father – pay yourself first, son. No, my father is not David Chilton.
He is a retired nurse administrator now in his early 60’s who grew up in very large family in Eastern Ontario, the eldest of many. In his teens he worked long hours after school and on weekends to help support his parents and family. Without any formal financial training my father learned the value of a dollar very early on because funds were so scarce. When you grow up with more brothers and sisters than digits on both hands you learn how to be frugal faster than most.
My father’s financial lesson to pay yourself first, son, started to sink in as a teen. As a 12-year-old I carried the Ottawa Citizen and saved some money during my first year with the route to go halves on a bike with my parents. After I had enough of the early morning deliveries, I worked in the fast-food industry which provided some spending money on weekends. At age 16 I stopped flipping burgers and got a job at Canadian Tire in my hometown. The cash provided money for the car, touring around town with my best friend listening to the latest hair-bands on tapes. The girls thought that was great, believe me folks… I returned to work at Canadian Tire every summer during my university years, making a few thousand bucks that helped pay for textbooks and beer money, I suppose more of the latter. With my degree in hand thanks to the University of Ottawa I started my first full-time job in the pharmaceutical industry almost 15 years ago. Armed with my first “real job”, I heard the pay yourself first mantra ringing through my head. Since starting that paper route years ago, I had always saved for things I wanted to buy. As a young lad without any credit you can’t buy what you don’t have the money for. So, with my meagre full-time income in my 20s, living in Toronto and starting my career, before the rent was paid I started doing what my father said I should do as soon as I could – pay myself first. I haven’t stopped since.
Some years I didn’t contribute very much to my RRSP, maybe only a few hundred bucks per year – but it was a start. I might have contributed $25 or $50 a month throughout most of my 20s actually. (There was no tax-free savings account (TFSA) back then – too bad.) I also contributed to my company’s defined contribution pension plan as soon as I started my full-time work as a chemist and they matched my contributions, mind you, in some high fee mutual fund products. In my own account, the mutual fund holdings in my RRSP were nothing to celebrate but they did grow modestly over time. A decade ago, I didn’t understand dividend investing, index investing, nor did I have any clue how important asset allocation was. Since my 20s I’ve matured as an investor. I’ve learned money management fees kill your investment returns almost as much as bad investing behaviour. I’m still learning about personal finance and investing and my plan is to never stop.
Approaching another milestone birthday next year, I continue to pay myself first. I’m passionate about personal finance and investing today in part because of a lesson told to me a long time ago. As a kid, many things go in one ear and out the other, lost in time. For some reason, the value of saving and paying myself first, thankfully, stuck. Automatic contributions are at the core of my “pay me first” strategy and my wife’s as well. So, we pay ourselves first and hopefully always will. Some lessons in life are worth sharing and passing along.
What’s your best financial tip?
This post was written to promote financial literacy in Canada, a worthy campaign led by Glenn Cooke, president of Life Insurance Canada.com. November in Financial Literacy month, and Glenn is spearheading the Blog for Financial Literacy campaign that will post the “best financial tip” from Canada’s top financial bloggers, including Canadian Capitalist, Canadian Couch Potato and many more. Today, along with my post, you’ll likely read about dozens of “best financial tips” online that are aimed to help Canadian consumers. Thanks to Glenn for asking me to be part of this effort. I hope you enjoyed my story.