Inside: Reflections on how my Chinese American mother taught me fundamentals of personal finance.

With my daughters close to launching into the world – one a senior in high school and the other graduating from the local community college in the spring — I sat down with them recently to have a heart-to-heart talk about personal finance.

My mother, an immigrant daughter who grew up during the Great Depression and who didn’t have the opportunity to finish high school before starting to support herself, often talked to me about money when I was growing up. She taught me that wise money management is a powerful tool of feminine strength. She knew how to be frugal, imparting its value in getting ahead. She taught me to value higher education and how to save and invest. Feeling confident in my ability to manage money has given me self-confidence, the ability to shrug off small slights, and meant I was never financially trapped in a relationship. Those are gifts I want to impart to my daughters.

1. Live Below Your Means

I began by talking about the importance of living below your means. Here I differ a bit from my mother’s approach. Because of her impoverished background, Mom practiced extreme frugality. She clipped coupons, unabashedly bargained for good deals, sewed her beautiful clothes, always brought homemade sandwiches on road trips and to ball games, and recycled everything.

And I mean everything! She transformed old sheets into new ironing board covers, cut the bottoms off cereal boxes to create drawer organizers, used jars as drinking glasses, and more. Today environmentalists would call her a “zero-waste practitioner.”

Due to her frugality, we never lacked essentials despite her and Dad’s modest incomes. We took some nice vacations and lived in a safe neighborhood with good schools. She coupled her daily example of frugal living with classic Asian parent advice:

High-Education + Lucrative Career Path (doctor, engineer, or attorney) + Frugality = Honorable Life That Will Make You and Your Parents Proud

Comedian Steven He satirizes the cultural sentiment in his skit, How Asian Parents Flex:

So when I said I wanted to major in English literature, she was so disappointed she wouldn’t speak to me for three days. She hadn’t scrimped for decades so I could get the college education she could only dream of, only to have me pursue something impractical.

We came to a strange compromise. I pursued a secondary interest in environmentalism by getting a master’s degree in Hazardous Materials Management. With this, I performed a valuable service for a solid salary that allowed me to live comfortably, buy a home, and save.

But I was never passionate about my work.

John Quincy Adams once said, “I am a warrior, so my son may be a merchant, so his son may be a poet.” I figured my grandfather was an immigrant, so my mother could be a waitress, so I could be a professional, so my daughters can be anything they want.

I have encouraged them to pursue their passions, but I also say this:

            Do What You Love + Low Overhead = A Good Life

            Do What You Love + I Deserve Nice Things = Time Bomb(1)

My daughters are creatively inclined. I like to think they take after their parents. My husband is a Character Modeler for Disney, and in the autumn of life, I am blessed with getting to teach ballet to children and do freelance writing. A career in the arts isn’t for the faint of heart, but low overhead and frugality are invaluable for making it work.

2. Create an Emergency Fund

The girls are going off to college and won’t entirely be supporting themselves yet. Still, we talked about creating an emergency fund because emergencies will happen. Mom had talked to me about the importance of a “rainy day fund” when I was quite young. Starting at 17, she worked as a waitress with 12-hour days and every other Sunday off at a mom-and-pop restaurant. Eventually, she applied for and was offered a new job that would allow her to earn just as much, working only 40 hours per week.

Unfortunately, she misunderstood the terms of her new employment and immediately quit her old job, thinking she could start the new one right away. Her new employer wasn’t prepared for her to start for another week. She was in a quandary. She had been living hand to mouth and had just enough to pay her rent but not enough to buy food.

Wandering around Chinatown to be in the comfort of her community, she happened on her older cousin, who asked how she was. “All right,” she said, and they exchanged pleasantries, but finally, she added sheepishly, “Actually, I’m in between jobs. I found a new, better job. I thought I could start right away, but it turns out they don’t want me until next week, and I have already quit my old job. I’ve sort of…run out of money.”

Her cousin quietly looked at her for a moment, then opened his wallet and handed her a twenty-dollar bill. She almost cried with gratitude. “Thank you! I’ve been hungry.”

“Well, get yourself something to eat,” he said with a kind smile. “I’m glad to hear you’ve got a new job. Try to save some money when you can…you know, for a rainy day.”

She never forgot that. She started putting a little away into savings with each paycheck. She told me, “When something unexpected happens, it’s a good feeling knowing you’ve got the cash in hand to handle it.”

I talked to my older daughter about this a while back. She’s been working part-time since she graduated high school. One day her old Google Pixel cell phone died. She had the money in her savings account to immediately cover its replacement. I could hear Mom’s voice, as I said, “That’s a good feeling, isn’t it? — Knowing you’ve got cash in hand to cover an unexpected expense without having to stress.” And though my daughter wasn’t happy suddenly shelling out hundreds of dollars, she agreed.

3. Use the Power of Compound Interest

Shortly before I left for college, Mom proudly showed me a thick pile of mutual fund statements. The first statement revealed she had opened an account on my behalf for $100 in April 1965. In October, she added $10, and in December, $25. Eventually, the deposits became monthly. The final sum on the last statement was enough to cover the cost of my four-year education at state college. It was a humbling moment, contemplating all those years of her planning and dreaming on my behalf.

Shortly after graduating, a financial services salesperson approached me at my workplace about opening an IRA and showed me a chart called the Power of Compound Interest.

Astonished, I went home and asked Mom to see the college fund statements again. I calculated the fund had averaged an 11% annual gain over 18 years, a higher-than-average rate of return compared to the general stock market, which averages 10% over the long run.

Once I saw that, I opened an IRA when I was 22, investing $2000 in my first year through monthly contributions. Five years later, seeing how the fund had grown was satisfying.

When my teenager mentioned that her part-time employment at the local mall offered automatic deductions into a Roth IRA, I talked with her about the power of compound interest. She decided to sign up for automatic 5% deductions from her pay. That’s not much, and she doesn’t miss it at all, but small amounts become powerful when invested for 40+ years.

4. Enrich Your Spirit

God walks out of the room when you’re thinking about money.

Quincy Jones

Mom first learned to sew in her high school home economics class. Back then, there was no such thing as fast fashion; if your means were limited and you wanted something special to wear, you sewed it yourself. She became an excellent seamstress, sewing beautiful clothes for herself, me, and my sister.

When I worked in an office, I often received compliments on my rich-looking, finely tailored suits, and when colleagues learned that my mother sewed them, they often said, “Oh! Her work is stunning. Can I hire her?”

I always passed on their requests to Mom, and she always replied, “I don’t want to sew for money. I want to sew for fun.” For her, crafting beautiful clothes was a soothing meditation, an artistic outlet, and an expression of her love for her daughters. She didn’t want to turn something that kept her spirit alive into something that literally kept her alive.

I advise the girls that not every hobby should become a “side hustle,” and volunteering and giving gifts enrich the spirit.

5. Money Can’t Buy Happiness

At the end of our discussion, my youngest surprised me by asking what I considered my biggest financial mistake. After some thought, I had to admit that I made my biggest mistake when trying to live up to Mom’s expectations of me as a young adult. As a traditional Chinese mother, she wanted me to marry, buy a house, and settle down shortly after finishing university. I ended up marrying the boyfriend I was dating at the designated time.

A year later, we began shopping for a house. But in the middle of the process (and long before then, if I’m honest), I knew my marriage was in trouble. And yet, I couldn’t seem to stop the forward momentum. We separated a year later, and the house became an albatross around my neck. Had we not bought it, our divorce would have been financially straightforward. Instead, it complicated the process far more than I would have imagined, and we both lost money. Buying a house with storm clouds on the horizon was an awful mistake.

I know that’s not the kind of financial lesson Mom ever intended to impart, but I certainly never blamed her. I just realized that I really needed to be authentic and honest with myself. Being grateful for everything she did to smooth my path in life didn’t mean that blindly following her vision for me was wise.

Perils of Financial Illiteracy

Recently, I read that 56% of Americans can’t cover a $1,000 emergency expense with savings, that parents are far more likely to talk to their sons about investing than their daughters, and that millions of Americans aren’t financially prepared for retirement. I don’t want my daughters to fall into these categories. For all these reasons, I am grateful that Mom never hesitated to talk to me about money matters early and often.

Sadly, she is gone, but her words and stories last. I hope to pass on her legacy along with my own lessons learned to the next generation.

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An Invitation

If you’d like to learn more about my mother’s story, I invite you to take a look at my recently released book, The Strength of Water. If you’ve enjoyed this or other posts, I invite you to subscribe!

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(1) Do What You Love formulas are from “Keep Going: 10 Ways to Stay Creative in Good Times and Bad” by Austin Kleon.