I HAVE FOND MEMORIES of walking the Atlantic City boardwalk with my father, enjoying the ocean breeze and discussing life’s secrets. As I grew older, he used these walks to impart financial wisdom; nothing clears the head like the sound of rolling waves breaking over the sand. My father endeavored to fill my brain with notions about setting long-term goals and how best to achieve them.
“Let your money work for you,” he’d advise. “Time in the financial markets is your friend,” he’d say. “Pay for your future first, and only then spend the rest.”
When I married 35-plus years ago, my wife and I put his words of wisdom into practice. I had a stipend as a graduate student, albeit a small one. My father gave us the money to meet the minimum investment required to open a Vanguard Windsor II fund account. My wife and I then set up an automatic transfer of $50 each month, coinciding with the day my paycheck arrived.
How fun it was to watch that fund grow. Indeed, the early growth seemed almost exponential, because our additions were a relatively large percentage of the initial balance. Within a year, we upped the monthly transfer to $60. Then $75. By the end of the third year, we were adding $110 to the fund each month.
Yes, it was an odd number. But I figured that, if we could afford $100, why not an extra $10? I know it doesn’t sound like a lot in today’s world. But for a young couple, it was a huge financial commitment.
Two things came of our Windsor II investment. First, we developed a sense of financial security. We had, in essence, created an emergency fund. We felt it was untouchable, primarily because it was outside our local bank account and hard to access—remember, this was in the mid-1980s. We now had money for life’s little curve balls, such as when our twins were born. The savings meant that we didn’t need to borrow for the unexpected doubling of the number of cribs and car seats, food and diapers.
The second result was more important: We developed the habit of saving for our future. When we landed our first real jobs, we already had the savings mindset, and we took full advantage of our workplace retirement plans.
That initial Windsor II account morphed to match our risk tolerance. Over time, we shifted to a more aggressive mutual fund, the Morgan Growth Fund, which eventually became Vanguard U.S. Growth Fund. Whenever I received a raise or bonus, we increased our automatic purchases, topping $500 a month by the time the twins were ready for college. The great bull run that began in 2009 meant that a good portion of the twins’ college costs were covered. We never did open a 529 college-savings plan. Instead, we selfishly saved for our own future, including maxing out our 401(k)s and other retirement accounts, but that left us with enough to cover college costs as well.
My wife retired a number of years ago, and I recently transitioned to part-time, with the hope of fully retiring by the end of this summer. Even this close to full retirement, we continue to make automatic monthly deposits to our Vanguard account. I truly feel that continuing to save even in retirement is a worthy goal. Only time will tell if we’ll have the money to do so.
I think my father would have been pleased by his son’s decision to take his advice to heart. I’ve found moments over the years to pass on my father’s wisdom—financial and otherwise—to his grandchildren. Sometimes, when I close my eyes and really concentrate, I can still hear his words, “Pay for your future first.”
Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden.