LIKE MANY OF MY generation, I grew up in a family that never talked about money. I had some sense that I should save, but no sense of where to save. This made me susceptible to a lot of advice—both good and bad—that shaped my financial journey.
I married a teacher and I became a school-based speech pathologist. I knew we’d never be rich, but we would have a comfortable life. In those early days, the teachers’ lounge was often visited by guys I called “lounge lizards,” who pedaled 403(b) plans specifically for educators. I usually avoided the lounge on those days, but one salesman happened to visit on “Friday treat day.” As I walked into the lounge to grab a delicious treat, I overheard him say that people of my generation “will need $1 million to retire.” I thought to myself, “That’s absurd.” Yet the statement stayed with me and quickly became the foundation for my financial journey.
Fortunately, those 403(b) plans weren’t our only retirement savings option. At that time, our state retirement system—which covered school district employees—was providing a small match for those who saved in its 401(k) plan. Thinking about that $1 million, I opened my first 401(k) and saved just enough to get the match. Three months after I signed up, the match was eliminated. Still, the momentum of automatic savings had begun. A short time later, my husband opened his 401(k). We never thought about or missed the money that was deducted.
We also saved outside of our 401(k)s. When we amassed a small sum, we wanted to do more than just keep it in a savings account. We didn’t know where to invest it, so I asked my dad for advice. He gave me the name of his “guy,” who invested it in a few mutual funds and took 1.5% for himself. After a couple of years, we looked at our statements and thought, “Why are we paying this guy 1.5% while our money just sits in these funds? We can do that ourselves.”
Around this time, just as we were gaining the confidence to do our own investing, we made our biggest mistake. Two insurance agents were making a slick, compelling presentation in all of the local school districts about a new product that would make everyone a lot of money. We saw all of our colleagues signing up for it. One of the insurance agents was the trusted parent of one of my husband’s students, so we signed up, too.
“It” was variable universal life insurance. When we finally figured out it was complete garbage, it cost us $4,000 in surrender fees. That was painful, but we concluded it was better to lose $4,000 now than tens or even hundreds of thousands of dollars later by sticking with the policies.
While feeling stupid and mad about being so gullible, I happened to be watching Suze Orman on PBS. I’m not a huge fan of following the advice of a financial personality. Still, Orman said something that profoundly affected our financial journey: “No one will ever care about your money as much as you do.” That’s when we finally agreed that we’d never again let anyone manage our money. We opened a brokerage account with Charles Schwab and transferred the mutual funds from my dad’s “guy” to our new account.
Eventually, we talked about starting a family. We read that four years of college would cost around $100,000 to $120,000 for a child born in the early 2000s. It was another absurd number, and yet it spurred us to save money for our son’s college education before he was even born. At the time, 529 plans were still new and most didn’t have great investment choices, so a Schwab advisor suggested we each open a Roth IRA and earmark the dollars we contributed for future college expenses. That advice was both good and bad. Arguably, no one should be dipping into retirement savings to fund a child’s college education. Still, the advice did get us to open and regularly contribute to Roth IRAs early in our careers.
Through all of this, we lived below our means. That advice was never spoken, but it was the behavior I learned from watching my parents. This allowed us to consistently put money into our 401(k)s and Roth IRAs. We worked to keep our living expenses low, so our savings naturally rose with each pay increase. When my husband became a school administrator, we continued to spend as if he still only had a teacher’s salary.
We also paid off our mortgage early, which then freed up money each month to cover our son’s college expenses. Thanks to that, along with a generous scholarship, we never touched those Roth IRAs for college costs. At the same time, we taught ourselves about low-cost index funds. Today, we keep our accounts simple, holding just a few low-expense ETFs and mutual funds.
My husband retired a year ago and I’ll retire in the next year or two. As our son gets ready to graduate, we gave him the only advice we ever needed: Live below your means, save early and automatically, and learn to be a do-it-yourself investor—because no one will ever care about your money as much as you do.
Allison Foster is a soon-to-be retired speech pathologist in Colorado. When she’s not at school, she’s busy hiking, biking and kayaking in the Colorado mountains. She’s looking forward to exploring new trails in her retirement.