For many of us, our parents were the main influence for our financial outlook (for good or bad). To help celebrate Father’s Day – it’s this weekend, don’t forget! – here are the top 10 money lessons from Dad:
10 – “Don’t give the government more than you have to.”
Love getting a gigantic tax refund in April? Congratulations – you just gave the government an interest-free loan that you could have been sitting in your savings account. Adjust your tax withholdings so that you get only a little bit back – or even have to pay a bit – and make that money work for you, not the government.
9 – “Always think of the rainy day.”
When you’re on top financially, you feel invincible. But if there’s one thing that the past year has taught us, it’s that fortunes can change overnight. The most stable of situations is not always as steady as you expect. Even a small savings account is a good idea, but ideally you want to have three to six months of living expenses waiting for you.
8 – “Don’t pay more than you have to.”
Impulse buying is so very hard to resist. But in a world of comparison sites galore, a few minutes of looking around could save you a significant amount.
7 – “Better late than never.”
I was not exactly the type of person that cared much about credit while growing up, or even in most of my young adulthood. However, if there’s one Dad adage that stuck with me, it’s this one. It would have been smart to start in on the credit game years ago, but since they haven’t invented time travel yet, starting now is better than continuing to let the problem get worse.
6 – “Patience will be rewarded.”
This isn’t exactly one I enjoyed hearing. Who has time to be patient when there’s a whole world out there, just waiting to be explored and enjoyed, and filled with shiny things to buy?! But this advice has come in handy the second I started tracking my credit score, watching it slowly go up over two years by keeping my bills paid and my credit lines pristine.
5 – “Make a budget and stick to it.”
This one took me a long time to actually do. At first it was because I was living paycheck to paycheck, and it wasn’t like there were any extras to cut out. Then it was because I wasn’t living paycheck to paycheck, and I wanted to enjoy that fact. In either situation, a written budget that I actually adhered to would have helped make things more comfortable (by either offering a bit of breathing room or by more quickly building my savings).
4 – “Don’t bury your head in the sand.”
Overwhelming debt can be a pain, but ignoring it does not make it go away. I spent months not caring about my student loans, not paying them, ignoring notices, nearly letting them default. I’m sure that Dad could go ahead and throw in a good “I told you so,” but thankfully I managed to avoid that.
3 – “Think about the total cost of ownership.”
This is another one that I wish I would have heeded long before buying the sports car that requires $1,000 a pop touch-up jobs every six months or so… with cars and houses, and a few other luxury items, the price on the tag is not the price you actually pay. That total cost comes from the interest you’re paying, maintenance, and other associated costs.
2 – “Being broke is not the end of the world.”
The amount of stress that I’ve felt when money was tight could have landed me in the loony bin. It didn’t have to be that way, though, had I bothered to listen to Dad. Instead, I let money worries consume me. Although it’s no fun to live paycheck to paycheck, it’s futile to stress about it every minute of the day.
1 – “Don’t spend it if you don’t got it.”
Crudely worded, to be sure, but so true. Although you do need to rely on credit for certain large purchases, you’ll find a path to the debt-free life if you save up to buy that shiny TV rather than just putting it on the card and worrying about paying for it later.
How many of these lessons did your Dad offer you when growing up? If you’re now a parent, how many of these have you passed on to your child?
Remember to give Dad a big “thank you” this Sunday for all the financial tidbits he’s shared over the years!