Tuesday, June 10, 2008

I save like my father

I don't believe my father ever formally sat me down to tell me his thoughts about how to manage one's finances. But, based on what I saw and stories I was told, this is what I gather to be my father's approach to saving:
  • Always pay yourself
  • Pay yourself first
  • What you pay yourself should never decrease
When my oldest sister was born, my father sat down with my mother to discuss a plan he had. He would like to set aside a certain amount in CDs every month, just for my sister. My mother agreed it was a great idea, but when it came to his suggestion regarding how much to set aside, she reminded him of their intention to have additional children; Whatever amount they agreed on had to be an amount they could, with certainty, set aside for each child. Being reminded of himself, my father modified his recommendation and they started with 1/2 his original proposal.

My approach to saving is firmly founded on my father's principles. My first paycheck out of college was dissected into two parts -- the part I would spend and the part I would save. But, as eager as I was to save, I made sure to pick a conservative savings target. I knew that if I went overboard with "savings", I may end up dipping into it for bare necessities which would only blur the line between the two parts of my paycheck. Besides, it was important to me that my savings rate be maintainable and have only an upward trajectory.

I'm not sure why this was important to me. Perhaps it's because I grew up thinking it's a smart thing to do. Or because I tend to associate financial stability and independence with personal freedom. Either way, I like that it's at least one tangible way of incorporating my dad into my every day life.

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