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One model of money management

Sunday, May 15, 2005 at 04:40PM
Posted by Registered CommenterPolitical Mammal in Entrepreneurship, My personal history

I grew up in a family that valued money management. That background has served me well in running my business.

My parents, both teachers, conserved money by turning down the heat at night, shutting off lights when they were not in use, cooking our meals rather than going to restaurants, packing lunches to take with them to their work, cutting our hair rather than paying a stylist, cleaning their own house rather than hiring help, sharing one car, and shunning conspicuous consumer goods. Because of their example, I grew up proud not to want things just because others had them. I also came to believe that my parents made most of these financial decisions on principle; that is, you eat better and more healthfully when you cook for yourself and you turn the heat down at night because you are not wasteful.

My parents were not, however, opposed to spending money on things they valued. They saved for the occasional luxury, for trips, and for their children's college educations. I was fortunate that they bought us an early Apple II Plus when hardly anyone had a computer. Possessing that computer gave me the chance to learn how to program and turned out to be a pivotal investment. I consider myself lucky to have been immersed in a family philosophy that held that decisions about money should be based on real priorities.

I turned out to be less careful than my parents, but I absorbed most of their values. After I left their home I regularly spent less money than I had available. For example, during my first semester in college, the maintenance and dining hall workers went on strike and Yale was forced to give back to the students the shocking amount of money that our parents were paying for meals. So I ate as much restaurant pizza as I wanted, but unlike some other students, I saved about half of the allotment.

My first job out of college paid $24,000—as much as many have to support a family, but a smaller salary than many of my peers. So I shared an inexpensive apartment with a friend, built my own furniture, cooked most of my own meals, and saved a $6000 that year without effort.

As I have gradually become more prosperous, I find myself feeling funny about money. If I let dollars drop too easily, I remember the stories my parents tell of our impoverished immigrant ancestors who would walk five miles because they thought it was extravagant to waste the nickel on a bus. And when I enjoy my Tivo or iPod, I confront the memories of the strong anti-materialists in my family. I sometimes have trouble squaring my heritage with owning an industrial-quality table saw or splendid mortiser.

Making decisions about the comparatively larger sums at play in my business is also at times confusing. From the start, I decided that business money and personal money were different. I have been determined not to skimp on investments in equipment and employees. But I have steered us away from the Aeron chairs, the K Street office space, expensive marketing schemes, and, until I relented last month, personalized pens. On most days, I think avoiding those kind of expenditures has served us well.

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