Since Father's Day is quickly approaching, we here at Investopedia wanted to honor our dads by sharing some stories about the best financial lessons our fathers taught us. We cover everything from budgeting to employment advice, and we will hopefully show you that your dad's advice - though it may have seemed curmudgeonly at the time - can help you out throughout your entire life. Feel free to share your own stories in the comments section. Each of these stories has been shared by an individual from the Investopedia Staff. Happy Father's Day!
On Home, Budgeting and Shopping
My dad did much to influence how I manage my finances today. Dad's lessons were rarely formal sit-downs. Instead, my dad taught me his financial values through his everyday frugality.
First, seldom is anything ever permanently broken. Most anything can be fixed for less than the cost to replace it. And fortunately for my dad, many people give up on something the moment it breaks. Dad likes to scour the "free" section of Kijiji and fix what other people have deemed worthless.
Second, if repairing something requires hiring a professional, avoid doing so at all costs. Professional help is a costly last resort reserved for marks who can't or won't take the time to read a book. Besides, the only difference between you and an expert carpet installer is practice.
Third, if you're in over your head and the only viable and sane option left is to hire a professional, avoid doing so at all costs. Your pride has a price too, and that price won't appreciate after you've handed over your half-installed corner shower unit to a $100-per-hour plumber. No, the only option now is to make due and accept the result.
Next, if you need to buy anything, don't go where the sheep go. That is, don't go to Wal-Mart just because it's close and you know they'll have what you need. Instead, hunt for that obscure shop in some industrial area that sells discount electronics (I swear, it's legal) or look for the guy selling razor blades and cologne at a city center flea market (probably not as legal).
In the end, perhaps the greatest financial lesson my father has taught me is to want for less. Owning the latest iPad can definitely make you happy, but that joy can't match the smug satisfaction my father receives from having no use for tablets and not having spent $500 on a gadget. The more you explain how amazing and useful your iPad is, the more he's certain that you're all that is wrong with this world. He's likely more proud of the purchases he's never made than of any that he did, and that's a mindset that leads to a lot of savings in a short amount of time.
Budgeting and Saving
My dad taught me the importance of saving and investing at a very early age. From the moment I turned 13 and got my first allowance (yes, I got an allowance at 13, sue me) he made me a deal. He said he wanted me to learn the power of saving and investing, so he would act as a fake bank and for every dollar I saved and "invested" in his bank, he would match it. I know, a pretty awesome bank, right? Well it wasn't that big of a deal to him because my allowance was only $20/week (if I got good grades and did my chores), plus there was another catch: I could only withdraw my "investments" at the end of the year on New Year's Day. At first I blew most (OK, all) of my allowance on candy and Slurpees, but after a while I thought I would give this "saving and investing" a try. One week when my dad went to give me my allowance I said, "Keep it, I'm investing it in your bank." He was happy, almost too happy. I mean I just made him double my wage for the same amount of labor - what a sucker! But really, he knew that soon I would learn a very important lesson. What I got the most out of this exercise was not just double my allowance (even though that was pretty wicked), but I also learned to rationalize my purchases and that I can make my money work for me.
SEE: Budgeting Basics
When I started my first job at age 15, The Bank Of Dad promptly closed. The closure may also have been motivated by the fact that after year one, I "withdrew" my investment (I think it was close to $500) only to re-invest in his bank again for double – ha ha. With the "bank" closed, I began to learn the harsh lesson that there are few secure investments in the real world that will give you a 100% ROI. So, he went on to teach me what real returns in the investing world are like, as well as the importance of contributing to employer-matching contribution plans. Thanks to dad, I had almost $3,000 by the time I was 15 and got my first job.
My dad had a difficult time keeping a job because he always felt the need to speak to management when he didn't agree with their decisions ... which was always. This taught me the importance of being strategic with your voice and the importance of keeping a job.
On Spending and Budgeting
My father has taught me the important financial lesson of cutting out extraneous expenses and focusing on what really matters. When I was younger, I guess I wasn't quite getting the message of saving and paying myself first, so my father thought it appropriate to give me "The Wealthy Barber" for three different Christmases between the ages of 17 and 25. He also taught me to be skeptical of spending on fads and trends in general; whether it was wasting my money on a fitted baseball cap (when there were many "perfectly good mesh-backed softball hats around the house") or saving my allowance to buy new Nike basketball shoes (when I didn't play basketball), he's taught me to focus on what's important and that the best way to get ahead financially is to cut out the expenditures that you don't need.
My dad never really went out of his way to teach my sister and me about money, but there was always a general sense that the finances were being well handled. We weren't overly spoiled (well, except for the horse he bought me – no, we didn't live on a farm), and a lot of things were put off "until we had the money". And while we never did make the trip to Disney Land, we never went without the things that were truly important.
SEE: Retirement Planning
The one thing that my dad did, that I've always been aware of, was plan for retirement. My dad's retirement fund is in the form of life insurance policies - he has four, two of which are intended for retirement. He also kept life insurance policies for my sister and me that he started when we were babies. He paid $10 a month on them, until he signed the policies over to us after we started our own families. It's because of this rather indirect lesson from my dad, that I had life insurance policies drawn up for my own kids, and insisted on my husband getting one.
My dad always told me: "Don't buy anything unless you actually have the money for it - and never put it on a credit card."
My dad always told me to pay yourself first. Pay yourself 10% of your paycheck first, then pay all your bills, and the remainder you can spend on whatever you like.
It is much easier to save a little over a long period of time than a lot in a short period of time.
On Spending Priorities
I had wanted a video game system for YEARS. I asked Santa over and over again and he never delivered. My Dad said if it was something I wanted I'd have to save for it myself and buy it. Finally, when I was 12, I saved up $250 from jobs and chores to buy the video game system that I so badly wanted. I went to the mall with my mom with the intention of buying a Sega Genesis. As we were walking through the mall we passed through a sports store – and I saw a basketball hoop (as if it were glowing under a beam of light from heaven). Needless to say I ended up getting a basketball hoop instead. The rest is history and I've never became a video "gamer" (as a matter of fact I'm terrible). It was a great lesson learned in that the thing you really want, that you have to save and earn for, may not be the thing that will bring you the most satisfaction in the long run. I got way more out of the basketball hoop and the skills it gave me in life than I would have ever gotten out of video games. I still play to this day … and I still have the hoop. My dad and I even shot baskets on it when I was back home for Memorial Day.