Where do our money habits come from?
During my apprenticeship accounting days, when I earned very little (less than£2 pw), I became good friends with Seamus Mooney who worked as a clerk at the local court. Seamus purchased anewMiniwith his savings. I was in awe of his ability to save and his financial discipline. He took me on several great holidays in that car. The court clerk and the trainee accountant on tour.
A couple of years later after I started my own accounting practice, Seamus introduced me to his parents who owned a clothing, shoes, and haberdashery business in a country town some distance away. Their income tax affairs needed attention. When I had their accounts ready for discussion, I travelled(now in my own car bought with a loan!) to their town to finalise the figures submitting them to the income tax office.
The amount of money that small business owners could live on was always a thorny point with income tax inspectors. Some small business owners seemed to ‘live on fresh air’ and the tax inspectors thought that this was because they were not disclosing all their income.
As Mr. and Mrs. Mooney appeared to live very frugally, I queried them several times on the small amount that they took from the business for living expenses. Eventually, Mrs Mooney said to me; “Bryan, do you remember when you went to the toilet an hour ago?”. Very nervously I replied “Yes’’, thinking ‘what did I do up here!’
She then said, “Did you see there was a roll of toilet paper?” This was getting worse. I was now probably crimson faced as I responded. “Yes.”
“Well, we only take out the toilet roll for visitors. We use the tissue paper from the shoe boxes on ourselves.”
The parents’ frugality was genuine and had rubbed off on their son Seamus.
When we start earning money our behaviours and habits with money are usually what we have learned from our family. If we grow up in a household with little money, poor spending habits and a propensity to borrow to pay for living expenses, we repeat that behaviour because we don’t know anything different.
A few questions to ask ourselves:
How did I get my money habits?
What habits do I want to change?
If I changed those habits by now how much would I be better off on the future?
Perhaps it is not giving up using toilet paper, but maybe giving up or reducing takeaway food or coffees for a while, and putting the money saved in another savings account or piggy bank.
