Best Financial Advice From Dad
Updated on Jun 18 2018
In honor of Father’s Day, we’ve collected some financial wisdom from Dad and Grandpa. Thanks to our staff, readers and the wisdom of experts in the finance industry, here are some fiscal pearls of wisdom.
Most readers agree that Dad is a pretty smart guy, especially when it comes to finances. In many families, especially when reflecting on older generations, Dad ‘brought home the bacon’ and was responsible for managing the family budget.
For many of us, our fathers have played a profound role in shaping our financial habits; so much so that we still discuss our plans with Dad well into our adult lives. Whether it’s deciding where to invest retirement savings, how much to pay for a first home, or how much of each paycheck to invest in a 401(k), Dad helps us stay on the right financial path.
Dad’s Financial Tips: Advice for Life
Dad’s wisdom is something many people will carry with them forever and will influence every financial decision they make. Here is some of the best financial advice we collected. We hope you enjoy!
1. Leverage Equity
“The best advice my Dad gave me about managing money was leveraging the equity you already have to increase your total wealth. My father decided to buy real estate near my campus so that I’d have a place to live. The magic was that he rented out every other bedroom to college students to pay off the mortgage.
Once I finished university, he sold the property (which increased in value), put the equity back against the family house and gave me the balance to start my own investing portfolio. This was a very powerful lesson since it wasn’t just an idea or principle. I saw it applied before my eyes.”
~ Russle B., Real Estate Advisor
2. Start Building Credit Early
“My Dad helped me get a credit card when I turned 18 so that I could build credit. The family made big purchases on the card and paid them off right away to help me establish credit so that I could be better prepared for life.”
~ Casey H., Senior Finance Advisor Staff
3. There’s Power in Compound Interest
“Get the free money from 401(k) matches. Best thing I could have done that early in life, and totally opened up my eyes on the power of compounding over time. My 401(k) went from $0.00 to $150,000 in just a handful of years and jumpstarted my passion for personal finance.”
~J. Money, Finance Blogger
4. There’s Good Debt and Bad Debt
“There’s good debt and bad debt. Bad debt is debt you have to pay for and makes you poor. A credit card purchase for new shoes makes me poor. Good debt makes me rich, such as financing a good investment, and someone else pays for it.”
~Robert K., “Rich Dad, Poor Dad” Financial Expert
5. Be Financially Independent
“If you have the ability to make your own money, you don’t need to rely on someone else. If something happens, you have stability. Also, always keep a separate bank account from your partner/spouse so you always know that you still have some independence, but have a joint account for mortgage and bills. Dad used to also say that communication for big-picture finances is key.”
~Linda S., Reader
6. Work Hard
“My Grandpa used to always say, ‘If you’re willing to work, you’ll find work.’”
~ Vanessa C., Senior Finance Advisor Staff
7. Take Advantage of Savings
“Take advantage of every offer for savings, especially 401k with matching funds from employers.”
~ J.D. Roth, Financial Blogger
8. Don’t Spend Money You Don’t Have
“Too many people don’t balance their checkbooks or budget these days and live off credit. My Dad and Grandpa used to pay for everything with cash to prevent overspending. While this may not be realistic today, being diligent about setting strict budgets for expenditures and reviewing finances regularly to avoid overspending is definitely feasible.”
~ Dana L., Senior Finance Advisor Staff
9. Pay Your Bills On Time
“Whether it’s consumer debt on credit cards, student loans or a mortgage, most people find themselves weighed down by debt at some point in their lives. This can keep us working jobs we hate just to pay the bills and keep our heads above water. By paying bills on time and learning how to pay off debt fast, you can release this burden and remove some of the stress from your life.”
~ Frank S., Reader
10. Save for a Rainy Day
“Dad used to always say that you need to be financially prepared for the bad days, whenever they may come. Be ready for those emergencies by having a dedicated savings account, preferably a high-yield savings account. You’ll want to have enough in the bank to cover at least three to six months’ worth of expenses.
~ Tom B., Reader
11. Don’t Quit Your Job Before You Have Another
“This is common sense but is sometimes hard to follow if you’re really unhappy in your job. My Dad taught me that you always need to get your financial ducks in a row before making a rash decision. Do your due-diligence to find a new job before you quit the one you have; otherwise you’re setting youself up for more stress, not to mention financial problems.”
~ Kelsey T., Reader
12. Set Financial Goals to Plan for the Future
“At 14, my father took me to his bank’s local branch to open my first savings account. We sat down at the desk with the bank manager and I shared that I had saved $370 and I needed a place to keep it so it would grow.
Entering high school, I knew I wanted two things on the day I turned 16: a driver’s license and a car. If I was going to make them both happen, I was going to need a plan. Dad and I worked out a savings plan to help me save the money I earned from a part-time tutoring job. It took me a bit longer to save up for my first car than I anticipated, but planning and saving to reach a future goal is a valuable life lesson—one I share with my clients every day.”
~ Joe B., Time Inc., Financial Writer
13. Live Below Your Means and Seek a Professional’s Help
“My dad taught all of us to live below our means and seek professional management of retirement savings early in our career. I saved a substantial amount, relative to my earnings, and have been fairly conservative in my spending habits; but I have seen the real benefit of having someone follow my investments and pick the best managers for my retirement savings. A trusted expert knows the market and can help you manage your money based on your goals and needs. This advice has really made a difference.”
~ Charles S., Financial Advisor
14. Always Buy Used Cars and “Drive Them Until Their Wheels Fall Off’
“My dad was a firm believer that cars were a depreciating asset and ‘lost value’ the minute you drove them off the lot. He taught my brothers and sisters and I that you need to buy a used car that ‘checks out’ mechanically and has a warranty, and then take care of it and drive it until the ‘wheels fall off.’”
~ Martha B., Reader
15. Invest Wisely: The Financial Choices You Make Today Will Determine Your Tomorrow
“My father taught me early on the value of investing in myself and my ‘business.’ When I was still an early teenager, making money by mowing lawns in the neighborhood, he helped me buy a more powerful lawnmower so I could do more yards faster - and “financed” it for me, at a cost of $10 per mowing, until I paid the whole thing off. It took almost 3 summers, but gave me the sense of accomplishment of having invested into my lawnmowing business and enjoying the “pop” in income that came when it was finally paid off, and I had no more debt payments! I used this same philosophy in portfolio management to help my family and clients invest in their futures for a successful retirement.”
~ Michael K, Certified Financial Planner