Dad on Money

Dad at his graduation with his parents
We’ll never know the worth of water till the well go dry. – Scottish Proverb

I admired my dad. He was an intelligent man with a dry wit, always ready with a comeback delivered with a Scottish burr. He earned a Master of Arts degree in Economics from Glasgow University. This is the same university where Adam Smith, the father of modern economics, graduated in 1737.

My dad moved to Canada in 1955, achieved his designation as a Chartered Accountant, and soon married my mom. He worked for Revenue Canada for many years until his retirement. Since his work was focused on corporate tax investigations, he couldn’t talk much about it, other than saying he enjoyed seeing how different companies ran their businesses. Dad was similarly reluctant to tell us much about finance and investment. It’s only gradually, in the years since he passed away, and going through the many papers that he left behind, that I’ve started to piece together more about his philosophy on money and investment.

Part of the reason we never spoke about finances is that, as a student, I had little interest in business. I was fascinated with science and psychology. I loved understanding how the natural world worked, so I travelled to new places and broadened my experiences. I was fortunate enough to find jobs that financed my needs, so it wasn’t until I was well into my career that I really took matters of saving and investing more seriously. Other than a single university course on “Economics for Engineers” I haven’t had formal training on investing, but I do like to read.

The early books I read on investing gave me a grounding in conventional personal finance:

  • The Wealthy Barber by David Chilton: Chilton encourages you to pay yourself first (10% solution), invest in low-cost mutual funds for the long term, and  prepare your will. The book was easy to read and gave me a good way to get started. Thanks to Chilton, I have a registered retirement savings plan, educational savings for my children and a current will.
  • Debt Free Forever by Gail Vaz-Oxlade: I was fascinated with Vaz-Oxlade’s television show, Til Debt Do Us Part, and her no-nonsense approach to budgeting. She encourages you to take stock of your debts and spending, set a budget and live within your means. Thanks to her, I now create a net worth statement every 6 months and a yearly financial plan, which provide me with a clear view of where I am and where I am going financially.
  • My basic financial educators also included others such as David Bach, Jean Chatzky and Kevin O’Leary.

After reading a growing list of personal finance books, I started to feel as if I was getting a handle on how to manage my money. I mentioned to dad that I was saving money in an RRSP and my financial advisor from the bank helped me to select some mutual funds. Dad was quick to say that he did not trust financial advisors. He felt that mom’s financial advisor prioritized his own interests over mom’s. Why not invest directly in stocks rather than paying fees to an advisor? Why not make a bigger investment in a company rather than spreading out my investments over a mix of companies that I knew little about? At that time, I wasn’t ready to take his advice. My financial advisor seemed well informed, my mutual funds had well-respected managers, and they advised allocating investments across various asset classes to reduce risk.

Recently, I was sorting through my dad’s files that I stored in the basement after he passed away. That was also about the time I was reading The Warren Buffett Way by Robert G. Hagstrom. I found that dad kept all his income tax returns back to 1990, accompanied by meticulous spreadsheets tracking his expenditures and investments over the years. When dad retired, he cashed in his modest “retiring allowance” and opened a stock trading account. He never owned more than a few stocks at once, and he kept track of the news and financial results closely for the stocks that he owned. For example, I found a huge file of news clippings on CN Rail: purchases of other railways, agreements for track sharing, and progress on intermodal terminals. By the time he passed away, dad had parlayed success (and some short-lived failures) into a financial legacy. What struck me while reading Hagstrom’s book though, was how similar my dad’s philosophy was to Warren Buffett’s. Perhaps I really should have listened to my dad sooner!

What I learned most from dad were from the things he didn’t say but demonstrated in what he did. Dad lived in the same modest home where I was born for 50 years. He promptly fixed anything was broken but he rarely splurged. His main indulgences were a computer for his hobbies, lunches out with friends and trips to Scotland to visit the family. If he needed a tool, he bought one. If he wanted a book or magazine, then he regularly picked one up. He closely managed his finances, tracking income and expenses, yet he was generous with gifts to the family. From watching my dad, I learned some important lessons more clearly demonstrated than advice from any book:

  • Spend less than you earn.
  • Spend money on personal growth and spend time with people you care about.
  • Handle any repairs promptly before they grow bigger.
  • Control your expenses before they end up controlling you.
  • Learn to manage your own money rather than relying on experts alone.
  • Leverage what you know to make intelligent investments.
  • Don’t be afraid to make big bets on winners.

What lessons have your parents taught you about money? It’s worth listening even when they don’t say much.

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