Growing up, my brother and I received allowances. This was my dad’s idea of teaching budgeting and responsibility at an early age. What could go wrong, right?
Well, when I was about 9, I wanted a doll, and against my mother’s wishes, my dad allowed me to borrow ahead on my allowance. With a “loan” now an option, I started borrowing more and more and eventually racked up so much “debt” that my father had to “forgive” it. He wiped the slate clean, putting me back at a zero balance, and he gave the equivalent amount that he had “forgiven” to my brother. Unfortunately, my takeaway from this process wasn’t a good one.
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This debt forgiveness led me to a life of borrowing over and over again, as there were seemingly no consequences. (By the way, my brother had the opposite takeaway; he has invested his money wisely over the years and patiently waited for it to grow.)
My dad tried to teach me about credit cards, too. When I went off to college, he gave me an American Express card for emergencies. When I came home at Christmas, he went over each charge I’d made — and it wasn’t pretty. It amounted to $6,000. To his credit, he didn’t kill me. But, again, this leniency also enforced a pattern of charging too much on credit cards and then struggling to pay them off.
Unfortunately, his well-intended indulgences weren’t great for me and it took me some time to learn the financial lessons he wanted to teach me.
My Dad and His Money Lessons
My dad grew up as an only child in a home where his mother worked — at a time when moms were supposed to stay home. My dad overcame his circumstances, though. He did well financially and invested wisely. A lot can be learned from his situation and his successes.
Here are the money lessons I eventually learned (and that I’m still learning) from my dad.
1. Pay Off Your Credit Cards Every Month
My dad used his credit cards wisely. He only used credit cards that gave something in return, either money back or miles that could be turned into free trips. But he didn’t charge something he wasn’t able to pay off every month.
Personally, it took using an American Express which required full monthly payment for me to eventually learn to use a credit card wisely.
2. Use Introductory Periods but Pay Off Your Cards
My dad loved a good introductory rate. But he always made sure that he had the money to pay off the balance before the end of the introductory period. Also, he usually earned rewards during this time. While his balance cost him zero percent, he usually invested the amount in an account that earned interest until it was time to pay it off. Not only did he get money for free, he usually got rewards by doing so, as well.
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3. Save Your Money for the Important Things in Life
My parents never bought drinks or snacks at the movie theater. They didn’t buy $1.89 20-ounce bottles of soda in the checkout lines at the grocery store (I thought it was strange, as they had money). What they did do was save up that money and use it instead to go on cruises that lasted for months.
This has been the ultimate lesson for me on how to save up for big expenses. Little purchases add up, and if you put that money elsewhere, you can enjoy a big payoff. Plus my parents usually used a rewards card for their booking, which taught me about additional benefits you can get that way.
4. Explore Unique Ways to Get What You Want
When my dad wanted to purchase a Mercedes, he explored the most economical way to get it. He ended up using the European Delivery Program, which allows customers to travel to Europe and pick up the vehicle from the factory, avoiding having to rent a car during a month-long European trip in the process.
Before I make a purchase now, I study the best purchasing period and wait for the incentives I want to be offered (free delivery or installation, for example).
5. Have a Plan and Make Sure It Works for You
My dad had a plan for their retirement. He readjusted his budget every year to make sure they were staying within it. He used actuarial charts and estimated he would live to be 75. True to form, my father passed away two months before his 76th birthday.
Though his love for me made him permissive with me, in the end, I found my way back from the days of constantly borrowing or running up credit cards without a limit. I think he would be proud.
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