My Best Financial Tip
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 very early in life.
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 at age 14 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. With my degree in hand thanks to the University of Ottawa I started my first full-time job in the pharmaceutical industry in my early 20s. 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. (We didn’t have the TFSA back then.)
I might have contributed $25 or $50 a month at best in my early 20s but it was a start.
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. As a 20-something, I didn’t really understand dividend investing, index investing, nor did I have any clue how important asset allocation was. In my late-20s I matured as an investor. I learned over time that high 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?
Your dad rocks! As simple as it is, how many fathers recommend that?
I tell my students this:
Never let a credit card company make interest off you…ever! I was recently listening to a CBC radio broadcast suggesting that the average British Columbian now owes $36,000 in consumer debt–up $14,000 from last year. How did we come to this?
Thanks Andrew…he also happens to be a pretty good friend. 🙂
BTW, I recently visited your site. Great interviews!!
Mark, I agree! 🙂 It takes most of us some-time to figure that one out. It’s a good thing your Dad taught you early. I believe the three pillars are (1) Pay off debt (2) Stay out of debt, and (3) Pay yourself first! You really can’t start a solid investment plan without those three in place.
Good job my friend.
Thanks Ninja. I like your three simple pillars.
I guess this is why many Canadians haven’t even started saving for retirement yet.
Its because they aren’t following your ‘best financial tip’.
Great post, Mark. Thanks for sharing your personal story.
I always struggle with saving for retirement and investing, and paying down the mortgage in a significant way. If we sold all our investments, I think we’d be close to paying off the mortgage but then we’d have to start the process all over again (investing). I think as long as we’re making lump sum payments on the mortgage every month, stick to our 9-year-plan for paying it off, then I can invest everything else. You can’t invest what you don’t save, or pay yourself first as you well know. I appreciate your kind words Avrex!
As I read this it reminded me of the way that I was brought up by my parents. It also reminded me how I took a paper route and saved my money in the bank and went on to buy my first home before the age of 21 because of what I had learned. Life is full of learning and experiences and taking what we learn and making a plan like paying yourself first or budgeting or whatever you value in the end will help one reach their goals. Great post mate. Mr.CBB
Age of 21, first home? Wow. I was a late-bloomer then at 27 for my first home. Continued great work on your goals…
What a great post and topic for discussion, Mark!
Unlike yours, my dad never gave straight advice on financial matters. He and my mom, however, set a great example how to be frugal and live within my means. I didn’t like it when they wouldn’t buy the toy or gadget I had asked for, but now as a parent I’m glad I know how to say “no” to my own kids.
When I moved to Canada, I was clueless about investing. I got interested, and I started reading every book on the topic I could find. Little by little, I gained confidence and knowledge and at the same time, I worked hard and paid myself first, just like you did.
Now, as my kids grow older, I have great advice to offer. Hopefully, I will stir them in the right direction and give them a head start in life. Thank you!
Glad to you participated in the Financial Literacy Month!
The tip your father gave to you is very worthy. If we don’t pay ourselves first, nobody else will.