We continue our new column interviewing well known members of the community about all aspects of their finances. This month Roy McTaggart, Managing Partner of KPMG says you’re never too young to start to save.
How much was your first pay cheque and what did you buy with it?
My first paycheck was for CI$1,475 in December 1982 from the government. At that time I had just moved back to Cayman from university in the US to commence my accounting career in the Treasury. It was spent on normal, day to day living expenses. Nothing special.
Are you a spender or a saver?
My spending habits have changed over the years. While raising and educating my children through Prep and high School, I was clearly a spender as I was not particularly concerned or able to save during this time. Now that my children are grown up and I have matured, my focus has shifted to become a saver, as I focus on my retirement in the not too distant future.
When did you buy your first home and what was it like?
I purchased my first home in February 1988. At that time, I was returning to Cayman from a secondment in the US with two young children and needed the stability of having my own home. It was a modest three bedroom home in Lower Valley, with only the basic amenities and no TV or air-conditioning!
What has been your most extravagant purchase to date?
There were three, all aircraft. One of my greatest desires in life was to obtain my private pilot license. In 1996 when the FAA relaxed its vision requirements, thus allowing me to qualify, I set out to realise my dream. I found an instructor in Little Cayman (Marvin Milam), together we bought a training aircraft and I hired him to teach me to fly. Once I obtained my license, I sold Marvin my half of the plane and bought a brand new Cessna in Late 2008.
In 2009, I traded it back to the manufacturer for a slightly larger model with significantly better performance. Most of my flying takes me over water to the sister islands, Jamaica and the US (for annual maintenance). Thus, I felt most comfortable purchasing ‘new’ rather than ‘used’. I currently fly about 50-75 hours a year (not nearly enough) and particularly enjoy a Saturday lunch in Little Cayman for the proverbial $100 hamburger. At other times, you find me flying around the island just enjoying the beauty of this place I call home. It is a great stress reliever!
What is your biggest expense on a day-to-day basis?
Currently, my biggest expense is the ongoing costs of university education for my children. I have one daughter, Jodie, who will complete her Masters in Accounting in Georgia in December. My youngest daughter Jamie-Lauren will enter Florida International University in January. Fortunately, my home mortgage is now paid off.
When and how did you start planning for your retirement?
I began planning for my retirement in the early to mid 1990’s. At that time, I was in my early thirties, President of the Chamber of Commerce and very much involved in the national debate on the need for Pension Legislation. I recall that Billy Adam (a former Chamber President) was leading the debate in support of the legislation. My involvement with him helped me realise that it was a significant issue that I needed to address in my own financial planning. I also realised that the mandatory contribution rate of 10 per cent would be unlikely to meet my total retirement needs. Thus I began supplementing this by setting additional money aside and investing it in stocks and bonds to hopefully provide a reasonable sum for my retirement.
What advice would you give young people when it comes to their financial planning?
For all young people, it is never too early to start planning. No matter how modest your means may be, have a plan, and stick to it. Start saving from day 1, even if it is only $5 or $10 a month. Over time, you will be amazed at the effects of compounding interest on your savings! To young parents, the best advice I can give is a philosophy I live by myself. I view my role and responsibility as a parent as twofold: first, to raise my children and give them the best education that I can afford, so that they can take their rightful place in society and succeed the workplace and second, plan my financial affairs in such a way that in my golden years I will not become a financial burden to my children or the society in which I live.