Women & Finance: Mom’s Philosophy for Wealth Accumulation

Aug 18, 2021 | Newsletters

financial planning for women owned businesses

Women & Finance: Mom’s Philosophy for Wealth Accumulation

My 80-year-old mother lived in Korea through the remnants of the Japanese occupation, the full-scale Korean War, and South Korea’s triumphant industrialization in the 80s before immigrating to the United States in the 90s.  With these events came a range of experiences including deep war-related suffering to elation associated with arriving in the “land of opportunity”.  As a byproduct of her broad spectrum of life experiences, my mom is an unintended fountain of wisdom. I love hearing her quirky stories and insightful philosophy on pretty much everything.  And as I, a Certified Financial Planner, contemplated writing a piece on how to increase one’s net worth, I kept coming back to some of the important life lessons my mother taught me. Granted, 401(k), dollar cost averaging method, and HSA contribution, are important concepts to learn, but these are tools, not philosophies.  And yet, it is our outlook and values that shape much of how we wish to invest to grow our wealth.  Below I’ll unpack 5 important lessons from my mother, that have been essential to my own investment experience.

  1. “Two is Better Than One”

In my 20s, my mom reminded me repeatedly that choosing a husband will be the single biggest financial decision of my life.   Although some may read this and reflexively think: “Gold digger!” there is a much deeper intention behind her advice.  Having a life partner that shares similar values on savings and spending will not only help avoid dissolution of a marriage – an expensive proposition in and of itself – but also contribute towards how you grow your wealth over time.

Being on the same page on allocating resources, having a dual stream of income, being able to take two standard deductions and sharing family expenses will all contribute to accumulating wealth at a faster rate than a single person without these advantages.  Dual income also provides better risk management in the event one partner is unable to work, following a lay off or in the event of something more catastrophic, like a career limiting disability.  Granted, being in a lifelong relationship and being a joint decision maker is not for everyone, but it sure paves the way to be more advantageously positioned in growing your net worth.

  1. “Spend purposefully”

My mom is not an extravagant woman.  An outing can be as simple as a trip to Starbucks, which is something she loves to do. Nothing fancy, just a plain black coffee. My mom would not recommend culling an occasional visit to Starbucks to save more money.  She would ask, as Marie Kondo would, does this give you joy?  This is purposeful spending.  However, to save, sacrifices will need to be made somewhere. It is remarkable how many people – even those of high net worth – forget this important principle. So, remember to ask yourself, what are you willing to give up?

As an example, my neighbor loves having a house that looks like a model home straight out of a Pottery Barn catalogue.  She reads blogs and listens to podcasts about interior design.  She loves talking about light fixtures, tiles, and color palettes for the walls.  Her home looks and feels fantastic in every way – it truly brings her joy.  I would love to have a home that looks like hers, but given the choice, my husband and I would rather use our money for travel and experiences and forego the designer furniture.  You get one life, and for most people resources are finite, so be selective on how you spend money to bring the most fulfillment.

  1. “Make healthy life choices”.

My Mom’s mantra is “If you don’t have your health, you have nothing.”  Your health is your biggest asset, so it’s important to develop habits early in life that will lead you to good health.  Basic advice to a healthy lifestyle is substituting processed foods for “whole” foods, moving your body (whatever your preference dancing, cycling, walking, swimming, lifting weights etc.), getting sufficient sleep for recovery and healing and investing in relationships and communities that are important to you.

The follow-on effects for finances are clear: good health will literally save thousands in healthcare expenses for doctor’s visits, medical procedures, medications and much more.  Healthcare costs are now the single biggest reason people file for bankruptcy in the United States and you can expect healthcare costs to increase significantly well into the future.  On the other hand, being healthy could mean you will take fewer sick days at work and work more years to accumulate more income.  Perhaps not coincidentally, there are many similarities in the mindset required to succeed in health and investing, including discipline, consistency and taking a long-term view of your wealth.

  1. “Don’t be a prisoner to your home”

When my husband and I purchased our first home, my mom gently reminded me that the home is a place to sleep, eat and rest.  And while this may be the single largest purchase of most people’s lives, it is not an investment.  So, think carefully about how much of your income you want to commit to a mortgage for the next 15-30 years. The bigger the mortgage, the more stress you may feel regarding repayment responsibilities which can make you a prisoner to your own home.  Higher mortgages translate to lower discretionary spending for dining, vacation, recreation and making memories with your loved ones.  We all need a comfortable place for domicile, but make sure it is within your means and it is not eating into your quality of life – unless the home itself, truly brings you joy.

  1. “Don’t be afraid to take risk…but don’t take foolish risk”

Even though my mom comes from a traditional patriarchal society, she did not forget to remind her daughters that if you risk nothing in life, you will gain nothing.  Going after what you want inherently involves a certain amount of risk.  While my mother imparted this wisdom in a non-financial sense, it is one piece of advice that has direct applicability to one’s investment approach.  Some risk is worth taking, such as allocating some of your savings in the stock market. Investing in low-yield cash instruments and CDs is not a successful approach for wealth accumulation as inflation will likely eat into your savings.  Historically, investing in equities has been a great way to combat inflation and protect your purchasing power.   Time in the market has been a more effective risk mitigation strategy than attempting to “time the market”.

On the flip side, foolish risk is opening yourself up to potentially catastrophic avoidable losses. A common example (although far from the only one) is through being underinsured. Make sure you are appropriately covered for your house, auto, personal liability, disability, and life insurance.  One bad lawsuit or accident can be a disaster and ruin your life without these protective insurance measures.  Saving a few hundred dollars a year and being under insured is called being short-sighted.   Other categories of foolish risk could include extravagant tax avoidance strategies, buying into get rich-quick schemes or DIY financial management without sufficient education and training.

There is a lot more of my mother’s wisdom, born out of a wide range of life-shaping experiences, that I could fill pages with. However, the important takeaway is to recognize that the philosophies that shape our desires to grow and prosper, are at least as crucial to our investment approach as the tools we have to grow them.  If you need help getting started, I recommend finding a financial planner who can help you draw a line from your own values and experiences to a balanced wealth creation strategy that works for you.


About the author: Jackie Fontana, CFP®
Jackie Fontana, CFP®, is an associate portfolio manager at FBB Capital Partners, where she partners with her clients to help them achieve success on their most important life goals, including college planning, retirement preparation and legacy planning.

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