Illustration by The Globe and Mail. Source image: Getty Images.
The beneficiary: “Daniel” is a 68-year-old retired accountant in Edmonton who’s been married for more than 40 years. He has a sister and two daughters, both grown and married with children of their own. Thanks largely to his father’s financial teachings, Daniel’s long paid off his mortgage and is living comfortably without worrying about money – a new sentiment that entirely eluded the generation that came before.
The inheritance: A few years ago, Daniel’s Depression-era father passed and left his children with all the many, many pennies he’s discreetly saved over the years – on an always modest income, no less. “My father was terrified of another Depression and frugal to a fault,” says Daniel, who alongside his sister always encouraged their father to spend and enjoy his hard-earned money.
His father’s mattress, for example, was 60 years old and, after Daniel slept there while his father was in hospital, he described it as “the lousiest mattress I’d slept on in my whole life.” That his father had denied himself a comfortable upgrade for six long decades made Daniel’s eventual inheritance – almost seven figures worth of dollars meticulously saved one at a time – a bittersweet reminder about everything his father didn’t have or do in this life. “I really wish he’d spent this money on himself,” says Daniel.
What he did with his inheritance: Before doing anything, Daniel thought a lot about the virtues of saving versus spending. “I don’t want to be as tight with the money he was, but I don’t want to just waste it on stuff either,” he says. After taking some time to mull it over, Daniel decided the only and best way to use his father’s life savings was meaningfully.
First, Daniel made some sizable donations to charities and organizations doing good work. Next, he paid off the mortgages on both his daughters’ homes – but it’s just a loan and they now pay him a monthly payment rather than the bank, sans interest. (Far from a gentleman’s agreement, all this is very clear and official, thanks to the advice of a lawyer friend and drafted contract signed by all parties.)
Lastly, Daniel then topped all his grandchildren’s RESPs to the maximum. Everything left over sits in what Daniel calls the “rainy-day fund” – more specifically, an investment management account – which is replenished monthly with both daughters’ aforementioned mock-mortgage payments. The new question, therefore, is whether to wait for a rainy day.
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What he learned: While “these attitudes tend to dilute themselves over generations,” says Daniel, he’s the first to admit he’s not at all immune to his father’s penny-pinching influence. Compared to his father, Daniel’s something of a big spender, but compared to his own children, he’s not entirely unlike their miserly grandfather. Take cars, for example: “At a younger age, they drive newer, nicer cars than I ever would. They’re a lot more comfortable again at spending money than I’ll ever be,” he says of his daughters.
But unlike his father, Daniel doesn’t tell his kids what they should – or more often in this particular case – shouldn’t buy. But he didn’t just pay off their debts to gift them a free financial ride either. “I remember I had such great satisfaction when I finally paid off my mortgage,” he says. “I don’t think a house that Daddy gives them comes with any kind of sense of accomplishment, and I want them to have that too.”
Rather than save or wait for a rainy day, however, Daniel and his wife have vowed to enjoy the sunshine and go travelling, which they already did when they could but now they can more often and better. Last year, for example, Daniel and his wife embarked on a month-long European vacation through Central Europe, including Berlin, Budapest and Prague. Along the way, thanks to his sister’s keen investigative work on the family tree, he visited his family’s homestead from a century ago.
Daniel splurged just a bit for a better flight, nicer hotel and upgraded room. They ate at fancy restaurants that they might otherwise not have. Were his dad around to see all these little unnecessary splurges, says Daniel, he’d inevitably disapprove and probably “freak out.” Daniel’s doing it all anyway, if only because his father never could.
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