Five Lessons From Digging Into Our Parents’ Finances
By: Fraidycat Finance
Tags: Family, Finance, Retirement, Money, Parents

Photo by Wesley Tingey on Unsplash

Mr. Blue Sky and I have been married these some-odd years, and during that time, the financial situation of both sets of parents have been cracked wide open.

My parents’ situation was laid bare in divorce after decades of marriage, as each parent figured out how they’d live differently. Mr. Blue Sky’s parents, on the other hand, came into a very sizable inheritance and promptly retired relatively young.

In each case, through divorce proceedings and estate resolution, we learned new things about how they’d handled their money in life so far. We learned that they were both really average, middle-class couples but that the way they’d saved and spent has affected where they are today.

I’m not here to air a bunch of dirty laundry about our families — that’d be a little too salacious for my style. Instead, I am just writing about the five things that keep coming to mind, practical lessons I have learned from being “allowed behind the curtain” to see what would have been shielded when I was a kid.

Ideally, I’d like these lessons to influence where I find myself when I’m their age.

#1 — Even Above Average Can Be Scary In a Different Context

If you’d looked at my parents’ financial situation a few years back, you’d probably have had no complaints about their financials: a more-than-half-paid-off home that was well within their budget, a sizable 401(K) that, ideally, would start growing faster in the next decade or so before they retire, and no consumer debt.

Better than average, though, quickly becomes troublesome when you want to refinance in a crazy house market so that one of the pair can buy a different house in another crazy house market… all while splitting up that seemed-okay 401(K) and realizing it’s pretty small… especially since now there are alimony payments.

Basically, even people who aren’t doing “that bad” can quickly fall into tough circumstances. Both of my parents are mostly unscathed after the divorce, but they are probably going to work quite a bit longer than they would have otherwise. They have the advantage that social security still exists (no promises for my generation!), but their retirement daydreams just don’t seem realistic with these changes.

It’s easy to pat ourselves on the back for ‘doing well,’ but I hope to keep in mind, in my own choices, that a financial setback could undo a lot of that work—no resting on my laurels.

#2 — Lifestyle Creep Dies Hard

In addition to the stress of getting divorced, my parents face some common mid-life-and-later lifestyle creep issues. They love doing big home projects, traveling, and eating out at restaurants.

They can justify it all by saying, “I’m splitting a rental house with friends” or “it’s a very affordable deal on a metal roof,” but what we want to tell them, in an ideal world where they’d listen, is “you can really only afford to live simply and save a lot right now.”

What was in the budget pre-divorce is simply extravagant now, especially since both of them frequently talk about how they're getting too old for their lines of work.

Our conversations tend to revolve around them disclosing a new purchase, us not expressing a lot of enthusiasm but also withholding judgment, and them talking to us like we’re children, explaining how their decision was a great buy and not at all worrisome.

They get to choose how to live their lives — but these are people who, in the abstract, acknowledge that they need to batten down the hatches and save. I want to make sure I don’t fall into a rationalization trap myself, where I know that the best call is to simplify and buy fewer luxuries, but I let myself believe everything I’m buying is either needed or something I “deserve.”

It’s not about them doing something wrong or right: after all, these are people deciding about being slightly more prepared for retirement versus spending now. They aren’t risking bankruptcy with these choices. It’s just about the fact that I want to be as clear-eyed as possible about my choices in life, and I can see that there’s some rationalization going on for them.

#3 — Old Tight-Fisted Habits Die Hard

Let’s swing to the other side of the fence: Mr. Blue Sky’s parents.

These folks are charmingly, occasionally achingly, frugal. For a long time, it made sense: low-end of middle-class wages, one stay-at-home parent, and a mortgage that was right on the edge of affordability at the time were all in play when his parents were choosing their lifestyle.

Since Mr. Blue Sky and his sibling left the nest, however, these folks have gotten, possibly, more frugal while making tons of money in a solid long-term job.

And I wish it was just a live simply, grow a garden kind of frugal. It’s more like “bring three coupons to a restaurant and huff about any issues with your meal while barely tipping 15%” kind of frugality.

Which, I know, is something that people have to do sometimes when they are struggling to make ends meet. But these two aren’t doing that: and they spend in other areas of their lives. They just really really like getting a good deal and crow about it for a while afterward, even if it was at the expense of fairly low-paid service workers.

What’s even crazier is that since their large inheritance, which enabled them to retire comfortably, they’ve remained that kind of frugal. I am all for spending carefully as you get used to retirement… but if eating out and tipping generously is going to blow your budget… maybe just don’t eat out!

I know things are complicated by the fact that we all have money mindsets, and a scarcity mindset will make you feel lack even when you are a literal millionaire.

What I want to internalize is that when abundance exists, I can make decisions in light of that abundance. I still don’t have to spend lavishly, but priorities like tipping and buying small amounts of well-made items should still be part of my life.

#4 — Save Now, So We Don’t Have To Hope for a Windfall

That being said, it was interesting to see how much Mr. Blue Sky’s parents had saved without the inheritance — it was more than my parents had saved, but like… not that much more, given that they’d acted super frugal for so long.

Their ability to do what they wanted, retiring a few years earlier than average, was kinda determined by that large windfall. Their family is pretty open, and it’s true that the relative that left the inheritance was getting quite old, but dang! You don’t want to make your financial plans around someone else’s money, do you?

Obviously, people who think they have a windfall coming their way are going to think about it. No blame there. I just want to be the kind of person who can look at my finances and say, “I could live my values and accomplish my goals under my own efforts if needed.”

That’s a privileged position since a lot of what makes us dependent on others is out of our control. But because I’m in that privileged position where my own choices could make me financially independent, I’d like to keep saving in such a way that I don’t need to hope for a windfall.

#5 — We Don’t Want Our Kid to Worry For Us

In their own ways, both of our sets of parents surprise us: more than anything; it’s just nervous-making to realize that behind the curtain of “we’re middle-class family doing just fine” are some cold hard numbers that realistically could run out.

More than any particular part of the financial picture, we’d love for our kid to genuinely trust that we’re going to save and invest enough to support ourselves even if medical issues create an extremely expensive retirement life.

I want to level with him in the ways that Mr. Blue Sky’s family has, and I want to remind him that we’ll handle our own choices the way my parents have. They really aren’t doing a bad job at all, just preparing slightly differently than we would.

At the same time… maybe it’s just natural that kids with a strong relationship with their parents eventually flip from being the “worried about” ones to being the worriers. So if he worries a little about us, that’s probably okay — it means he cares how we do. :)