The Best Financial Advice from my Parents
I reached financial independence, quit my job at 38, and relocated with my family soon after. I achieved this thanks to my three guiding financial principles – sensible spending, active saving, and sound investing. Not surprisingly, these three guiding principles intersect with how my parents taught me in my early years. I’ve been blessed to have such guidance from them since the beginning and know that not everyone had the same blessings as me. Therefore, I’m sharing the best financial advice my parents gave me and how it still applies today.
From my early years, my mother insisted that I keep a ledger of all my money coming in and going out – down to the penny. Looking back, it may seem a bit comical how much time I spent thinking over a matter of coins. But as a kid, it felt like a ton of money. My parents wanted me to be a good manager of it. I was able to reflect on my financial decisions by knowing how much I earned, how I handled it, and where it went. The attention to detail I learned here was integral in my future financial success.
Pay Yourself First
Full disclosure, I don’t think my parents ever used those words with me, but that’s what they meant. They told me that I must save half of what I earned (allowance, odd jobs, etc). By doing so, I was setting myself up for long term financial needs (college expenses) while moderating my own discretionary spending. I carried this over to how I saved, invested, and spent as a young adult. Doing so at such an early age allowed me to take maximum advantage of time and compounding. Big picture, this all played into me reaching financial independence in my 30’s.
Enjoy What You Have
Growing up, I received plenty from my parents. But I always knew some other kids had more stuff. Naturally, I felt it was unfair at the time, but I knew it made me value and enjoy the things I did have more. Of course, I splurged here and there, especially right after college. I probably bought more CD’s than I needed to. But thanks to my parents’ guidance (and also in the two previous topics), it never got out of hand. To this day, I find great enjoyment out of fully consuming the possessions I do have before I buy more.
My parents instilled the importance of giving to others. I embraced the way I can give to a variety of organizations and individuals. By doing so, I’ve been able to gain valuable perspective into others’ lives and challenges. By giving, I avoid getting too caught up in my own petty nonsense. Simultaneously, I can’t ignore that it feels great to see the immediate impact of helping others.
That’s a verb here, not a noun. My parents loved to coupon, or at least that’s what I remember. We were always looking for the best deal or savings in any given situation. I’ve extrapolated this act to a ridiculous scale in the points and miles hobby. I joke that most other people spend money on hobbies, not save because of them. That’s just another beautiful aspect of our hobby that I’m sure many of you enjoy.
That’s the best financial advice my parents passed on to me. Those areas still apply, along with a few tweaks I’ve added along the way. And as a parent of young ones, I like the process of passing along what I’ve learned. So far, so good – the eyerolls haven’t started yet. What financial advice did your parents pass on to you? Do you still follow it?