Inheriting Generations of Frugal Living

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Inheriting a huge sum of money is certainly a dream come true for many of us. Sometimes, we ponder on this idea whenever we watch a show that gives us a glimpse of the super rich. Other times, it happens when our friends get a gift from family ties.

Yet, many of us don’t seem to realize that we are parents of our children. That one day, we might even become grandparents. We think of frugality as nothing more than a myth because the iPod we want to buy is only going to cost $100 (or thereabouts) worth of interests in something like 50 years.

In fact, the clever writers even come up with a brilliant statement like

We can’t take our money with you when we die.

Latte Factor on Steroids

That iPod may be worth quadruple the cost in your lifetime, which you might still think is insignificant, but it will be 16x by the time it gets to your kids, and 64x when it gets to your grandchildren.  With that kind of multiplying power, even $100 becomes $6,400.

It might only be a couple bucks now, but a few dollars will grow when the time line is in centuries.

There’s also a side benefit too. If you are the perfect example of frugal living for your kids, that’s 24/7 responsible spending lessons for them, then the grand kids, and so on.

Frugal Living Hourly Wages

The main argument of not practicing frugality seems to be that spending hours upon hours to save a couple bucks is not an efficient use of our time. That the opportunity cost isn’t worth it. Fair argument, but are you going to get another job with your free time or does your employer allow you to log overtime?

There are 24 hours in a day, so if you spend eight sleeping and another ten working, what are you doing with the other six?

Look Pass Your Future

There are many ways to leap into a higher social class in the United States, but generations of frugal living and responsible spending is a seldom talked about but guaranteed way to achieve it.

Think not just for you, but for your tree of descendants.

One day, the dreams of a big inheritance might become reality.

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{ read the comments below or add one }

  • MKI says:

    Are all these arguments, to invest in funds long term, still a valid one with the low interest rates these days? I’m just curious being new to this field….

  • Caroline says:

    I think the writer is onto something here, but I also think that frugality can be inherited, and by this I mean that one learns by watching one’s parents, and if the relationship is a decent one and the parents are fiscally responsible, provide well for their children, are responsible with money, even if not particularly wealthy, this often rubs off. Sure, young people sometimes go through spending wildly and racking up some debt, but ultimately I think we ”become” our parents financially very often, either that or the diametric opposite! My folks were very generous, I lacked for absolutely nothing at all, university all paid for, but it was clear that there wasn’t a vast supply of money, and that there was quite a strict budget. Bond and bills and education and essentials first, all else later. Now that I am a parent myself, I find myself thinking on very similar lines; worrying about paying for tertiary education for my kids, retirement, the bond, only buy cars for cash etcetera. What is amazing is how we all see it differently and are all quite convinced that our own mindset is the ”right” one… but the point about investing a small amount regularly for the very long term is excellent, and my own dad did that for each of us kids. He passed away when I was 13 but made my mom commit to just putting that small amount away each month… and inflation / changing economies notwithstanding, I lacked for absolutely nothing, up to and including my wedding that took place 15 years after he died!

  • UH2L says:

    Here is a counterpoint here from a person that nearly maxes out his 401K every year and saves another 15% to 25% of his income beyond that. What I have learned with this recent financial crisis is that the car I bought in late 2005 was a better investment than my “investments” which I bought over the same timespan. Investments can vanish, but stuff is concrete and has utility and can be enjoyed.

    It is very important to save for our future and our subsequent generations, but it is true that you can’t take it with you and any one of us could die tomorrow. My father did pass away back in 2007 and he left my mom with enough to be comfortable, but she is in no mood to spend it. She would have rather have spent it while my dad was still alive so that they could have enjoyed it together. She looks upon extra money as somewhat of a burden because she has to decide who gets it when she passes away. I have to keep showing her that she is financially secure and that she should enjoy her life by spending some of that money. I get more satisfaction out of that than I would if I received it in inheritance to spend for myself or others.

    So, it’s true that saving money is important, but to live an ultra-frugal life where every penny is pinched is a major mistake. Charity is perhaps the best use, but once you donate a decent amount of money, you should use some of it for yourself or your loved ones. Many enjoyable things require no money, but what is money for if you can’t use it to further enjoy life?

    • Laura Vanderkam says:

      I think it has to be a balance. I heard a story recently from a woman whose parents left her quite a bit of money because they’d pinched their pennies their whole lives. She already does fairly well for herself, so it’s kind of money added to the pile. She’s spending it on charities she thinks her parents would have supported, which makes her happy, but she wishes that her parents could have had the joy of supporting those good causes while they were still alive.

  • Manshu says:

    Some nice math there.

  • MoneyNing says:

    That investment gift for your (grand)children is a great one. I should remember to do this when my kids are born.

    marci: It’s amazing how simple your money market account idea is but I’d bet that 99.9% of everyone won’t take action even after reading your comment. I think I will write a post about this particular strategy.

    PGWP: That’s why the “pay yourself first” strategy works so well. All you have to do is setup an account and have money automatically sent to your savings/investment accounts before you get a chance to blow it on the next iPhone. Trust me that you will thank me in the future.

  • Play Games Win Prizes says:

    You hear these type of sayings pretty often of how you should start saving now and in the end, it will be a huge sum. However, it’s just too difficult for some 🙁


  • marci says:

    Good explanation there. It’s also one of the reasons my paycheck goes into the money market account every payday – and then I draw out what I need when I get ready to pay the utilities, etc. Even that small amount of interest monthly adds up in the long run, and interest on the interest, etc.

    During the first year after each grandchild was born (there are 8 so far.) I opened an account for each one with $500. I add to it on their birthdays and Christmas. The plan is that they get control of it all at age 18, if going to college, or 21 if not needed for something major. College or not, it will be theirs. It may not be a lot, but it will be more than there would be if I had not done anything. This way it is not too painful on my budget…. altho, I do have to admit it was a LOT easier when there were only 2 grandkids when I started it 🙂 (not that I’m complaining at all.)

  • ObliviousInvestor says:

    I recently read a (true) story–can’t remember if it was in Die Broke or some other book I read recently–about a man who invested $1,000 in the market when each of his grandchildren were born. They weren’t allowed to touch it until they each turned 65.

    Every one of them who didn’t cash out early ended up being a millionaire without even doing any investing on their own.

  • Neal Frankle says:

    I really appreciate just the thought process. As a result of the financial crisis, not many people are thinking past their noses let alone their lifetime.

    Well Done David.

  • Nate @ Debt-free Scholar says:

    It is amazing. If you just save a little bit and invest it well, it could be come a huge inheritance for our children and grandchildren.


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