How many times have your grandparents rushed out to spend $800 on the latest and greatest laptop only to do the same thing six months later when the new, must-have model comes out?
If you laughed at the idea, you’re not alone.
Not all of our grandparents are frugal, but many of the seniors who lived through the days of the Great Depression spend more time saving their dollars than spending them. This is one of the most important financial lessons today’s younger consumers can learn from their own grandparents.
‘After what they saw in the Great Depression, [our grandparents] really swung toward protecting everything they earned,’ says Melinda Kibler, client service manager with Palisades Hudson Financial Group. ‘The younger generation is not as concerned about saving for the future. They live for today. They could learn a lot about the importance of saving from their grandparents.’
Read more: 13 things I learned about money in my 20s
Here are 7 key financial truths that older generations can teach the younger ones
1. Saving is not a sprint
The older generation understands that slow and steady makes the most sense when it comes to building wealth, said John Lindsey of Lindsey & Lindsey Wealth Management. The secret to becoming wealthy is to save money from every paycheck. Even if you can only save a small amount. Given enough time, even small savings can grow into large nest eggs.
‘Everything you ever wanted to know about investing is in Aesop’s ‘The Tortoise and the Hare,” Lindsey says.
2. Saving beats speculating
The Great Depression had a huge impact on those who lived through it. Those who remember those tough days tend to place more value on saving money than they do on risking it, said Kyle Winkfield, founder of The Winkfield Group, a retirement-planning firm in Rockville, Maryland.
‘Our grandparents might have seen their own parents lose money in the Great Depression,’ Winkfield says. ‘They saw the stress that came with that. So they have the mentality that it’s better to save money than it is to speculate on ‘get rich quick’ schemes. That’s a good lesson to learn.’
3. The future is just as important as the present
Matthew Tuttle, CEO and chief information officer of Tuttle Tactical Management, said that his financially savvy grandparents — whom he wrote ‘Financial Secrets of My Wealthy Grandparents’ about — never focused only on their present needs. They looked to the future, too, and saved money for their retirement years from an early age.
This is a lesson that many younger consumers need to learn, Tuttle said.
‘Too many of us think only of the here and now,’ Tuttle says. ‘We don’t think of the future at all. We buy what we want now without thinking about how these decisions will hurt us in the future.’
4. Cash is king
When was the last time you built up enough cash in a savings account to buy a flat-screen TV? If you’re like many consumers, it’s been a long time. But your grandparents? The financially smart ones save their dollars so that they can pay cash (not credit) for big purchases such as TVs.
‘The Great Depression generation doesn’t borrow much at all,’ Kibler says. ‘That isn’t to say that credit cards are a bad thing. But sometimes going on an all cash budget — even for just a short period of time — can be a real wake-up call for how you are spending your money. If you go on a cash budget and you’re out of cash by Wednesday, that’s a good indication that you are not being careful enough with what you’re spending.’
5. Rainy days happen
Do you have a rainy day fund to pay for those surprise expenses that pop up? Many of our grandparents do, and have maintained an emergency savings fund for most of their adult lives.
Kibler stresses the importance of one, especially for big-ticket unexpected purchases. A water heater that suddenly leaks can add thousands of dollars to your high interest rate credit card debt if you don’t have an emergency fund saved up to cover the costs of a replacement.
6. Live within your means
Winkfield said that the older clients who come to his office aren’t afraid to drive smaller, less expensive cars. They don’t mind living in a two-bedroom home instead of one with five.
They understand that living within their means is not a sign of failure. Instead, they recognize it as a virtue. And younger consumers should do the same, Winkfield says.
‘[Older clients] are very focused on reality,’ Winkfield says. ‘They want me to tell it to them straight. And if that means telling them that something they want is really out of their price range, they accept it and they don’t buy it.’
7. They have a distaste for debt
Winkfield said that many of his older clients absolutely hate taking on debt. And that, Winkfield says, can be a smart financial mindset.
Some debt might be unavoidable. Most of us will need to take on mortgage debt if we want to buy a home, for instance. But other forms of debt, such as credit card debt, are more dangerous because of the high interest associated with it. Younger consumers can learn a lot about the positives of avoiding debt by following the examples of their grandparents, Winkfield said.
Younger consumers can find out more about the best savings accounts at MoneyRates.com’s savings page.
Read more: 7 habits of financially successful people