I learned how to manage finances at an early age. No, I wasn’t reading Buffett, Munger, or Graham when I was 12 years old. The man who I learned from wasn’t a CEO of a big business or a stock trader. I learned the greatest financial advice from my dad, a farmer. The advice he taught me by example was how to live below my means.
Living Below Our Means
My dad grew up in a big family and they didn’t have much for money. Times were tough when he was a child. Kids were embarrassed to have holes in their clothing, a stark difference now days. People pay good money for those ripped jeans! I suspect the humble upbringing molded his financial tendencies a great deal.
Farming wasn’t exactly a lucrative business when I was growing up in the late 80’s and early 90’s. This didn’t stop other farms from having nice new machinery and vehicles though. I remember being quite embarrassed of some of the old tractors, combines, and trucks we had in comparison. The old antique tractors pictured above are just like the ones we used. It seems like something was always breaking down on those old things. But dad could always fix them himself.
So why couldn’t we get nice new stuff I often wondered? Just in case the reading audience isn’t familiar with farm machinery prices, a brand new John Deere combine can run as expensive as $600,000 these days. That’s not a typing error either! It isn’t hard to see how farmers can get into trouble with the combination of equipment debt and a bad year or years of crop prices. I’ve seen several neighboring farmers go under through the years. My dad made sure we didn’t suffer the same consequence. Even though I really didn’t understand why he operated the way he did back then, it couldn’t be anymore clear to me now.
His Financial Advice Carried Forward
Much like my dad, I feel it is my duty to make wise, conservative decisions with our finances. We can afford to drive nice luxury vehicles but do not. Our house purchase price is about half of what we were approved for. We eat most meals at home and don’t spend money on new clothes every month. I feel we are doing our pretty well to live within our means. Hopefully we can set an example that our son can follow for his future.
While we aren’t saving 50% (or more) of our take home pay like some, we are able to save a healthy amount every month. I try for at least $2k/month. The key of course is growing that gap between income and expenses. Sure there are areas of the budget that can be trimmed but a person needs to live a little too.
I mentioned above that my dad showed me by example. We didn’t sit down and go over philosophy and he didn’t preach financial advice to me. That isn’t his style. Everything by example. After years of reflection on how he operated his farm business, I have a great template to go by.
He’s in his 70’s now and still farms. Not because my parents need the money. They are well positioned thanks to their conservative ways and have been for years. Farming is in his blood, not sure what he’d do with his time if we wasn’t in the field or working cattle. He’s old school and retiring at an early age didn’t interest him. But living within our means kept food on our table and his farm successful when many others suffered a far worse fate.