Its Not How Much You Make But….How Much You save
Do you want to save money? Here are my favorite quotes on saving money.
Never spend your money before you have it. – Thomas Jefferson
Do not save what is left after spending; instead, spend what is left after saving. – Warren Buffett
He who buys what he does not need is stealing from himself. – Swedish Proverb
The price of anything is the amount of life you exchange for it. – Henry David Thoreau
Therefore, it is not how much you make, but how much you save that matters.
It was 2001. I was a young, aggressive, investment advisor on Bay Street. A call came in and being the broker of the day I answered.
Meeting potential clients
The caller was in his late 30’s, an executive in the hydro business and his wife was a marketing executive. They had two kids. He wanted to meet with me as he needed help to save money and start saving for retirement.
Are you kidding me? Sure…. It was an opportunity of a lifetime.
I called the wife and told her I would be late for dinner.
I am dressed to kill. The car is washed. I am ready to make an impression. I am ready to open an account and help this couple save money.
I drive around and check the hood. I see a Mercedes and BMW parked outside their home.
I am excited. My heart is beating fast. I have my pitch perfected.
I ring the doorbell and they welcome me.
Zero Savings
After the basic get to know chat, we sit down to have a more serious conversation. The numbers are impressive. They have a total family income of 250,000 plus bonuses. I can work with that. I can give them tips on how to save money.
After that, I ask how much do you save at the end of the month?
Their face completely changed. They had zero savings.
The monthly payment for the mortgage was $ 3,000, each car was leased for $ 500, private school per child was $ 2,000, trips, vacation and eating out took the rest.
I made some recommendations that included some lifestyle changes to be made in order to reach their goals and how to save money.
As a result, I left empty-handed and never heard from them.
As a VP with a US discretionary manager, I covered Ontario and Manitoba. I would only go to see a potential client who had a minimum of $ 750,000 to invest.
I flew to Sudbury to see a surgeon, an executive in the construction business and a retired janitor.
How to save money
As a result, I googled the home of the janitor and it was not impressive. To be honest it was in a derelict state. I thought to myself he probably wants free information on our stock picks and is not interested in our services.
I went to see him at 5 pm and he preferred that we sit out in the balcony. After the usual small talk, I explained a little about our services and asked him the usual getting to know your client questions. I asked him about his net worth and he did not have a clue. He brought out two statements from different banks and the total was about $2.5 million.
As I am looking at all his holdings, he tells me he also has some share certificates and bonds. He brings about 30 share certificates and bonds and they consist of all blue-chip stocks listed in Toronto and New York. His liquid net worth came to approximately $5 million.
I recommended that he convert them to electronic shares.
Above all, I was fascinated. I wanted to know his story.
He shared that he started off as an 18-year-old janitor and saved a lot of his money and invested in shares. He retired at 55. He was not interested in impressing anyone. He lived within his means and took vacations. Overall, he lived a simple life. He did want to leave a legacy with a few charities. He was good at saving money.
Conclusion
In conclusion, if there is something, I have learned from being two decades in wealth management is that it is not how much you make but how much you save.
It is important to go out, travel, spend time with family, and do other fun stuff but it has to be within your means.
Photo Credits: Michael Longmire Vanessa Lee Javier Reyes Zan Allef Vinicius Benedikt Geyer
You must have met some really interesting people in your career. I really like the story of these two clients, the way it illustrates that a lot of it is mindset and making sure that saving money — as well as investing it well — has to be a priority.
Never judge a book by its’ cover. What an interesting story with 2 different parts of the financial saving spectrum. It’s always a great feeling to be able to put $ in savings. Great post with a strong and simple message.
That’s such a great story about the janitor. I like that he saved and invested wisely and wasn’t concerned about impressing anyone or flaunting his wealth.
This is a pretty fascinating story. Well done to the janitor!
Sometimes when people have a small income, they are more inclined to look after it.
I sure wish I was that janitor or that someone sat me down and got me on the right path earlier. I am scared out of my mind for retirement and never feel like I am doing enough but with a kid in college and another one heading in a few years, a sweet sixteen etc. it never seems to be enough. That story reinforces to never judge a book by its cover.
I really enjoyed this post! It really puts perspective on the different views we have on money! I lived in Toronto and saw people live paycheck to paycheck with no security. I’ve always been one to put money in savings and then budget the rest. It’s a little harder here in southern Italy, because I make less, but cost of living here isn’t extremely high!
Loved this! Instead of providing generic, preachy points (which we all know and expect from an article on saving!) you’ve given us a much more personal, much more relatable take on a very important topic. These are great stories – really makes me want to sit up and take notice of my own finances. The janitor’s philosophy is spot on: ‘not interested in impressing anyone’.
Loved your strategies for financial success in the article linked – Do not keep up with the neighbor & Stay married, funny but true.
Very useful post and overall information! I am pretty bad with money and saving – your post helps a lot definitely!
Ha! What a great post. Some of the richest people I know drive around small cheap cars. While some of the poorest people I know are heavy in debt. I believe in saving from an early age and education your children in investing. Great post, thanks for sharing.
I come across so many of the younger generation these days who are working couples and they live a lavish life. They have loans, they eat out frequently, change cars every few years but when I inquired from a couple of them what are the financial instruments they use for saving, I was shocked to hear that they hardly save. How can one not keep in mind the rainy days.
Living within your means is SO important, and yet often overlooked in our society. Especially with the open availability of credit cards, loans, financing and more. Too many people are lured into the ‘buy now, pay later’ promise, eager to enjoy themselves without putting the effort into really earning it first.
Wow. He made it sounds so easy to save. And its true. If you live within your means, you will be able to save and go on vacations. Life can be as simple as it can be.
This was a great post and I agree with the man who surprised you! Just because you have a ton of money doesn’t mean you need a big over priced house, the newest cars, expensive furnishings, etc. I am the same way.
Okay, that was in incredibly good story! That janitor was amazing!
This is so common. So many people spend everything they make and look really wealthy from the outside. Just like your wealthy client, I know a lot of people who don’t look rich because they don’t have the fancy cars or toys – and that’s exactly why they’ve been able to save so much. Great post!
This is very sage advice and honestly I struggle with it. I understand living within one’s means. But where I get confused is “good debt” vs “bad debt” vs savings. We do have payments on a business loan (which includes the vehicle), mortgage and orthodontics. We have no “bad” debt. But we have no real savings. Is it better to start saving more, or focus on the debts first?
What a powerful example! I love the reminder.