Lessons from My Father: The Three Phases of Financial Life
My father, Byron Thompson, not only turned a remarkable vision for leading a banking business into a reality, he also taught his children many valuable lessons over the years that both enriched us on a personal level and enabled us to be fiscally responsible throughout our lives.
For my dad, it wasn’t just about revenue, expenses and balancing the checkbook. The bigger picture was about being on a lifelong financial journey. He always said that when it comes to money, there are three stages of life: making money, managing it and then giving it away. It’s a lifelong process, with plenty of decision-making, constant awareness and taking advantage of opportunity—then passing along what you gained to others.
Let’s take a closer look at these three phases of financial life, why they’re important, the unique challenges of each, and how Country Club Bank – through my father’s design – is positioned to help people fully accomplish each of these goals.
The first part of the journey is the actual earning of money. At this stage, you focus on building a career and learning where your sources of income will be, then making sure you're putting it in the right places.
Once you’re earning a sustainable income, it’s important to begin budgeting and understanding how your earnings will impact your future. It’s vital during the earning stage that you take a concentrated look ahead and stay consciously aware of what earning this money will do for you later down the line.
- How much money am I making right now?
- What are my career goals?
- How much am I saving after all the necessary expenses are paid?
- What are my first goals for my savings? (e.g., Do I want to buy a house soon?)
- How much do I want to earn two years from now? Five years?
- Am I happy with my current financial situation? If not, what can I do to improve it?
It’s important throughout the “earning” stage to keep these questions at the forefront of your mind, as evaluating the answers will help you make the most of your earnings.
This is far and away the most challenging phase of financial life. Many have fallen into the trap of poor management and found themselves in an endless cycle of financial trouble. But by managing money smartly, you can stay out of fiscal limbo and in control of what you earn.
Thankfully, you’re not alone as you try to overcome these challenges. The best banks will act as a partner with each of their clients and do the absolute most to help people manage and maintain their hard-earned money.
When it comes to the management of money, there isn’t a “one-size-fits-all” approach. Each individual has his or her own unique circumstances and variables that require careful consideration. That’s why the financial professionals at your bank of choice are invaluable.
Here are three ways your bank can help you manage your money:
- Online banking – Many people still don’t take full advantage of the power to control their banking at their fingertips. If you don’t use online banking – or you ignore it until it’s time to pay the bills – this service can really help you get a handle on your financial status. And banks have come a long way toward making their online resources user-friendly and helpful for managing money.
- Relationship banking – We establish a relationship with you, keep the lines of communication open and always work to best fit your needs.
- Professional financial advice, debt and credit counseling – Banks provide beneficial one-on-one coaching, and by using these experts to your advantage, you can get out of the debt cycle and stay ahead while managing your money.
There is also plenty you can do on a day-to-day basis to help manage your money:
- Track your spending – Record every payment you make and every bill you pay. Keep everything documented.
- Develop a budget that applies to your entire household – Record it in a digital spreadsheet or write it out on paper, and keep it handy. Update it as needed.
- Plan it all out with a calendar – Know when every payment is due and when you plan to pay it.
- Pay your bills on time, every time – Late payments are the top cause of debt and the quickest way to get into a cycle of bad money management.
- Keep adding to savings – Even if your deposits are small, make sure your savings accounts always have a steady flow of money coming in.
Giving it Away
Once you work your way through the “managing” stage, you’ll be ready to ensure those earnings will wind up in the right hands. Of course, money isn’t the only thing you’ll be handing down. This is an opportunity to pass along important life values as well as what you’ve learned during your financial journey.
The giving stage of financial life is about the whole package—the sum of financial wisdom and responsibility, personal values, goals and life missions. In an interview with The Dallas Morning News, financial psychologist Brad Klontz of Kansas State University says it’s not about how much you give, but what that giving reflects. My father would agree.
“Values drive behaviors. It is important to teach them the value of hard work, the benefits of being able to delay gratification, and how to be good stewards of their financial resources, through saving and charitable giving. Without passing along these values and skills, children are likely to mismanage and squander their inheritances.”
Recognize that you’re in a position to instill financial responsibility in your children. Begin this process as soon as possible so they’re able to successfully navigate the three stages of financial life in your footsteps.
I like to think my father was an expert at passing along these important values and life lessons to me and my siblings. These values also serve as the bedrock of our relationship-based service to our clients at Country Club Bank, informing every transaction, every decision and every interaction. My hope is that I can follow my father's example and keep these values alive, both at work and at home. After all, I know I learned from the best.
What stage of your financial life are you currently in and what challenges are you facing? Share your thoughts with us @CountryClubBank!