My father was a banker who wore a suit and tie five days a week and commuted into San Francisco from our home in the suburbs. Growing up in the 70s and 80s I was encouraged to be whatever I wanted to be when I grew up. I have clear memories of thinking that "banker" was not on my list of future occupations. But today, many years later, I consistently walk by a mirror or pass by a window in a building and see my father in the reflection. Not only have I grown to look and sound like him – I became a banker too and have been at it for almost 25 years.
My dad has been gone now for 20 years. What I have from him are some lasting lessons that I lean on today and hope to impart on my own three children.
I'm afraid that although "pay yourself first" was engrained in me from an early age, I almost had to have my arm twisted when it came time to act on it. Many company 401(k) or 403(b) plans these days have an automatic enrollment feature built into them so that you have to jump through some hoops in order to "not" participate in your retirement savings.
When I got my first real job a few years out of college and was presented with the benefit of a 401(k) with a company match, my first reaction – as it probably is for anyone entering the job market and trying to get by – was to skip putting money in until I was making a little more.
My dad took me through the scenario of tucking away enough so that I would get the 4% company match with a soft nudge of "you won't even notice that it’s gone." The bank was going to match me dollar for dollar on that first 4% that I would contribute to the plan, thus essentially doubling my money each year. And if I didn't contribute, I would receive nothing.
His next suggestion was that when I got a small raise in pay, I continue to increase the amount that I contribute, "because you still won't notice the effect on your paycheck due to a pre-tax increase of 1-2% a year.”
I try share this advice with every young employee who comes into our group at the bank. Even if it seems like there isn't any money "left over" at the end of each month, if you pay yourself first for retirement or acquire any savings at all – especially now that you can have it all done automatically – the accumulation and the compounding interest will have a huge effect on your personal balance sheet.
These days I'm afraid that nobody takes the time to balance their checkbook. My mom and dad would sit together at the dining room table, each with their checkbook register in hand and make sure that they had everything logged that could be expected on the "expense" side of the ledger. Today with mobile banking and online bill pay, it is easy to look at your current balance from your phone or tablet and see copies of checks that have cleared your account. However, while electronic payments, debit card payments and mobile check processing have taken much of the time out of the payments process, it is also very easy for items to clear your account at the speed of light and possibly get there before your deposits hit the account.
Keep your finances simple if you are using bill pay and schedule payments so that they correspond with your income. Gone are the days where a check might "float" for three or four days. If your income is somewhat irregular, put a line of credit in place to help smooth out some of the irregularities that modern life throws at you – but again, make sure that you pay yourself (and your line of credit down) as that income is received.
As a banker's son, I grew up in what I would jokingly say was a "thrifty" household. There was not a lot of extravagance for the sake of extravagance. What we did have, however, was often very high quality. We had a very nice home – dad always told me to buy the best home that I could afford. We didn't have what you might call "fancy" or "flashy" cars, but we had very high quality and safe cars all of our lives.
Dad also told me to pay for good quality health care, legal counsel and accounting and not try to do those things myself as much as I think I might be able handle them.
As Father's Day rolls around this year I look back at the wisdom and annoying habits that I was able to pick up from my father in the 30 years that I had with him. From "pay yourself first" to "watch your pennies" to "pay for quality," some of those things rubbed off on me and helped me to form the financial wherewithal that allows me to make good decisions for my own family.
We all grow up in some image of those people who help to shape and mold us. I like to think that much of who I am is a true reflection of the advice and wisdom that I was able to garner from my father – and I try to pass much of that on to my own children who will grow up to be some image of me.
A few years ago at our school's annual auction fundraiser, they showed photographs of all of the students in school holding a sign telling what they wanted to be in 25 years. There were of course a wide variety of occupations listed from NBA basketball player to doctor to Miss America. I was stunned when the photo of my third-grader popped up on the screen for all to see holding up a sign that simply said "Banker."
The nut doesn't fall far from the tree.
Ted Austin is senior vice president and market leader of U.S. Bank Private Wealth Management in Oregon and southwest Washington.