Important money lessons my dad taught me
Most of us still have a lot to learn about finance, but getting a head-start as a kid helps set good financial behaviour as an adult. Being smart with money, using credit wisely, saving a portion of each paycheque and investing for retirement can help you live a long and happy financial life. Having a good credit score can help you be approved for a mortgage, buy a car and get a job. Saving for retirement can help you eventually stop working someday.
All that to say, while setting good money habits as a child can help you later on in life, those habits are taught and learned. When it comes to nature versus nurture, money matters are almost always a by-product of your environment. Maybe your parents taught you how to manage and save your money, or maybe you learned how to be financially responsible by watching your parents' mistakes. Either way, important money lessons from your folks form the pillars of your financial knowledge.
Here are four money lessons I learned from my dad:
Pay off your credit
Letting credit linger can be a huge problem both in the short and long term. My parents both worked full-time, but they had two cars, a house and two young children. As it does with many families, that equals a lot of debt. When I turned 18 and got my first credit card my dad told me to spend only what I could afford because, "Debt only gets more expensive."
That is good advice that stuck with me throughout my student loans and mortgage, and it still stays with me today. I work hard and spend less so I can make more debt payments and reduce the interest charges.
Don't merge your money
My parents are divorced, and this is an important money lesson my dad taught me after the papers were signed: when people get married, they are in love and of course they don't want to think about what happens if the marriage doesn't work out. However, the one thing people never think about is, when you're getting divorced, not only are you not in love anymore, but you also don't trust your soon-to-be ex-spouse.
Keeping money separate (maybe not all money, but at least your own personal stash) or coming to a prenuptial agreement can help protect your net worth in case happily ever after doesn't last forever. Of course, this is something worth discussing with your spouse. You don't have to look at it as though you're hedging your bets on one another, just as a way of maintaining financial independence in a worst-case scenario.
Homeownership isn't for everyone
Despite the recent purchase of my first home, my father is always quick to point out that homeownership isn't for everyone. "It's almost as much work as kids," he says. There is always something to be done and always something that needs to be paid.
Until a few months ago I thought I would be a lifelong renter, but as we get older our ideal lifestyle changes. The best advice I can give new homeowners is to be financially prepared because the mortgage is just the first expense. There are many more to come.
Save for your education
My dad has always been a strong believer in post-secondary education. He never had the chance to pursue higher learning and when it came time to fill out university applications there was no negotiation. I went away for four years of school and although my parents had RESP savings, it wasn't enough to cover the cost of books, tuition, food and rent. Starting to save as soon as possible will help lower the financial burden of a college education.