For better or worse, your parents were likely your first money role models.
While I don’t recall my dad distilling any particular nuggets of wisdom on the topic, his actions preceded his words. For one thing, he was the ultimate cheapskate. We would only dine out on “Kids Eat Free Tuesdays”, and our go-to spots for quality time were the neighborhood park and local library.
One year, after spending $100 on an “Adventure Girl” bike for my birthday – complete with a safari-pattern frame, and pink and baby blue streamers dripping from the handlebars – my dad muttered after we left Toys R’ Us, “Nothing is free.”
The apple doesn’t fall from the tree.
As a self-described “frugalista,” I still enjoy a good bargain and have trouble parting with my money. In honor of Father’s Day, here’s a round-up of the best money advice from dads:
Know your numbers
It’s easy to let your money management slide when you’ve long neglected your finances, or when your money situation isn’t exactly where you would like it. Michael H.’s (that’s his blog pseudonym) dad helped him understand the basics of cash flow management by teaching him about income and expenses.
His dad helped him create spreadsheets, and always made sure that his numbers were balanced. “It was a tedious task at the time, but the lesson was invaluable,” says Michael, the founder of Financially Alert.
Michael wants to teach his children that money is merely a tool – nothing more, nothing less.
“I don’t want them to be afraid of it, and I also don’t want them to feel entitled to it,” he says.
“It’s a fine balance of teaching them the value of a dollar through hard work, saving and investing, and giving to those less fortunate.”
How to apply this to your own money situation: Check your bank balance. You can easily do this by logging into your bank account, or by way of a money management app. Know how much is coming in and how much you’re spending each month. There’s nothing like being blindsided by a low bank account balance.
The best way to double your money
When Logan Allec was around eight years old, his dad asked him, “Would you rather have $1,000,000 or a penny doubled for 30 days?”
Even though he was just a youngster, he instinctively went with the cool million. But his dad then demonstrated how a penny doubled for 30 days would actually yield more money.
“The morale was that you want to multiply your money and not just go for the quick wins,” says Allec, CPA and founder of Money Done Right.
“Since I’ve been making money, I’m also looking for ways to multiply my pennies,” he says.
“A lot of the frugal decisions I’ve made in my life trace back to this mentality: Would I rather spend my pennies on some item or experience, or would I rather invest them so that they can multiply and make me rich?”
How to apply this to your own money situation: Find ways to save so you can grow your money. For instance, drum up tactics to help you save on your living expenses. Or, learn how to negotiate to earn more money on the job. For easy, no-brainer savings, open a bank account with no fees.
Pay yourself first
The best money lesson Mike Pearson’s dad ever taught him was to pay himself first. For instance, every time you receive a paycheck at work, the first 15 to 20 percent should go into either a savings account, retirement account – or both. That’s right: You should pay yourself before paying your rent, car loan, cell phone bill, or what have you.
Now that Pearson’s a dad himself to two young kids, he wants to teach them to automatically invest in the stock market once they get their first “real” job out of college.
“The magic of compound interest is real,” says Pearson, the founder of Credit Takeoff.
“If you start investing 15 percent of your paycheck into a 401(k) for your entire working life, paycheck after paycheck, you will retire a multi-millionaire – simply because of automatic savings and compound interest.”
How to apply this to your own money situation: Before you pay your bills and debt, stash some money aside for your savings and retirement. To set aside money toward your future goals, create an account and set up automatic savings. Even saving a dollar a day adds up to $365 a year. Save two bucks a day and you’ll have $730 in a year.
Don’t treat your paycheck like a cash advance
When Kristin Larsen was in college, she had a job working at a clothing store. Truth be told, she took the job mainly to snag an employee discount. Instead of receiving a paycheck and then making a purchase as a separate transaction, Larsen had the option to have her purchases come directly out of her paycheck.
“That wasn’t very smart as I barely broke even with each paycheck,” says Larsen, who is the founder of Believe in a Budget.
“Once my dad caught wind and took a look at my earnings and spending, he told me it was time to find another job.”
Bottom line: Don’t treat your paycheck like cash advance. It’ll be gone by the time you receive it.
How to apply this to your own money situation: If you’re a Chime Bank member, the “Save When I Get Paid” feature can help you sock away some money before all that money goes toward your living expenses. If you have direct deposit set up with Chime, you can even get a bit of an actual advance up to two days before your payday.
Whether your dad gave you sound financial advice or not, pay attention to your money matters. This way you can take steps to improve your situation and reach your financial goals.