A Quiet Fortune: A banker, a businessman and a teacher | PostIndependent.com

A Quiet Fortune: A banker, a businessman and a teacher

Terrie Drake

Part 1: The Banker

A banker, a businessman and a teacher walk into a bar…

No, that’s not right.

A banker, a businessman and a teacher sit down and talk.

They tell me about all kinds of things: “smart moves,” “maybe I should haves” and “what I’d tell young people.”

I feel lucky. These are people I admire, people who could teach me a thing or two about how to make good decisions for today and for the future. I’d like to share some of their thoughts.

The first person I speak with is the vice president of a local bank. He’s a family man, active in the community, and genuinely interested in helping people. He welcomes me when I come into the bank. He has 30 minutes and I have three questions. The first one is: What are some of the things that you and your wife have done right financially?

He answers:

“I think I’ve always been a saver and investor, even when I was young. That might be because my dad was in sales and on commission. His pay could be good some months and not so great other times. I learned to be conservative and began saving my money for those rainy days.

“Second, my wife and I communicate about our budget, especially about big purchases. We have similar attitudes toward money and goals, but we also teach each other things. For example, I have learned that it’s OK to budget some money just on fun and entertainment. We also save money for vacations. I really hadn’t done that before.

“We have also tried to stay out of credit card and installment loan debt. If we charge something on our credit card, we pay it off every month. If we take out a loan for a car, we pay extra toward the principal to pay it off quicker. Basically, we have tried to live just a little below our means. That’s probably the most important thing.”

I ask about advice he’d give to others, especially young people.

“Use the Envelope System,” he says. I am surprised: I had written about that a few months ago even though I worried that many of you would think it outdated. But here was a bank vice president telling me that he and his wife actually do this: They put money in labeled envelopes to make budgeting easy and effective. The envelope system helps us have control over our purchases, delineate between needs and wants, and keep our expenses in check. Good suggestion.

The second thing he advises is: “Always put some money into savings. Get into that habit. Start as small as you need to, then work up to saving or investing larger amounts.”

Explaining further, he says: “Young people need to begin their financial future with savings. That will give them a cushion of liquidity (cash) to take care of problems like needing new tires, a doctor’s visit or another emergency. You can begin investing later, but get into the habit of putting a little money from your paycheck into a savings account. Keep a cushion of readily available savings for emergencies.” Once you have some savings you can then begin investing for the long term.

Finally, my friend tells us to “enroll in a 401(k) plan at your first opportunity.” If your employer has such a plan, enroll now. Not next week or next month or next year. Just sit down, find out about it and enroll. Even if it’s a small amount you start with, it will make a difference in your future that you might not be able to picture at this time.

(Note: if your employer does not offer a 401(k) please investigate other retirement plan possibilities, notably IRAs – Individual Retirement Accounts – and Roth IRAs.) The sooner you start, the better. The time value of money is an amazing thing.

I don’t have much more column space so I’ll condense my friend’s answers to Question 3, “What might you have done differently?”

He says: “I might have purchased used cars in good shape instead of buying a new one. I could have purchased term instead of whole life insurance. That’s also less expensive, and it keeps insurance and investments separate.”

Finally, he’d invest in index funds. Fees are low and you don’t need to do the extensive research that is required in buying individual stocks or various classes of mutual funds.

I want to thank this bank vice president. His advice comes from years of personal and professional experience and it’s appropriate for many of us. I appreciate his sharing it.

Terrie Drake is the author of the book “A Quiet Fortune,” and a retired teacher and librarian. She and her husband have lived in Glenwood Springs since 1974. She is not a financial adviser; consult a competent professional for your personal financial solutions. She can be reached at draketerrie@gmail.com.


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