The Gift From Grandma
By Gigi Kent (firstname.lastname@example.org)
November 10, 2000
After reading the Foolish Fribble classic column "Three Steps to Financial Control" by samd4, I couldn't help but reflect on my own experience.
My story begins with my frugal grandmother. She lived through the Great Depression and when she died at age 99 she left a sizable estate. That itself is not so amazing; what is amazing is how she amassed her wealth. She was not born into it and didn't marry it. She accumulated it by saving, never borrowing (except on real estate) and being careful about spending. I remember, and wore, her homemade clothes; I remember the hobby farm behind her house that supplied her kids' families with months of canned goods; and I remember the rummage (precursor to garage) sale castoffs that she turned into useful items.
The gifts she gave her grandchildren, if not handmade, were U.S. Savings Bonds. My grandmother talked to me about saving and encouraged me to put some of my babysitting money away. I grew up learning what it means to be frugal and that lesson has stayed with me. Except for one car loan and home mortgages, I haven't paid a penny in interest in the last half century. And I did it by using the method described by samd4. When you add up all your annual expenses and divide by 12 it's pretty easy to figure out how much money you need each month.
Over the years I managed to live within my budget because by annualizing my expenses I've known exactly what that budget is. Newly married and with two incomes it was pretty easy to save. When the kids came along and I stayed at home for a while, saving became more difficult and the budget had to stretch. When I went back to work, the budget stayed in place but savings accumulated. Then divorce significantly contracted the budget and I easily could have ended up in debt. But because I knew what my annual expenses were and the amount I needed each month to cover them, I stayed debt-free without dipping into savings. Now that I'm an empty-nester and my finances are much less complex, I'm tempted to do away with the monthly budget. But I keep thinking about my grandmother and I figure I'll be budgeting at least until I'm 99.