This is a guest post from MLR @ My Life ROI. If you like this post, check out his website or subscribe to his feed. I would like to thank Frugal Dad for allowing me this opportunity and I hope you all enjoy the post!
One thing that separates me from a lot of personal finance bloggers is that I have never been in massive debt. I never went through that “wake up” period where I looked at my bank account and noticed it was $1,500 overdrawn. And then only to realize my credit cards were maxed out. Sure, I have had my fair share of sticky situations where I had to step back, assess my situation, nervously laugh to myself, and then work on getting back to my yellow brick road. But never massive debt. So what could I possibly share that is worth reading?
My parents, and particularly my father (a daddy’s boy, you could say), taught me some very important financial lessons, if not life lessons. I have combined those lessons with my experiences that I have gathered from high school, college, and the past few years in the workforce since I graduated from college. I have a very analytical frame of mind so I like to breakdown situations into consumable sections. And if I had it my way their would be a lot of numbers.
I find that my posts are probably best for the 16-35 year olds out there who are looking for some useful information. And parents who are looking at ways to connect with their kids. And we have reached a full circle… this all comes back to the three most influential lessons my parents taught me. I hope some of you parents out there can use these lessons to connect with your kids. And if my peers never got these lessons from your parents, I hope some of you can also digest this information for your own betterment!
Lesson #1: Want is not need.
Photo courtesy of babasteve
I was not a particular needy child. My Christmas list usually only consisted of one or two things. My mother tells me stories from when I was a young’n. She used to love buying me gifts. And I loved tearing through them. But once I opened them all up I would take the two things I wanted and go to my room… leaving the rest of the gifts to sit under the tree lonely. I guess I was just quirky like that.
But boys will boys and every now and then I would see something in a store that caught my eye. I would demand it. I NEEDED it. I would go over every reason in the book as to why I needed it and how detrimental it would be if I did not get it. My parents could have easily purchased me these gifts. After all, I did not ask for much, right? However, I am glad they did not enable my behavior no matter how infrequent it was.
My parents always talked to me in a logical manner explaining to me why it was not something that was needed. They did this from a young age and continued it until I was an adult. A typical conversation between a 14 year old me and my pops would go:
Dad: So you need this baseball that clocks your speed for $40?
Me: Yes! How else will I know if I am ready to pitch when I get to high school?!
Dad: Do you and your coach feel comfortable with how you are developing?
Dad: Do you think you are a league above your peers when you pitch?
Dad: Then what does your speed matter? I’ll take you by a batting cage once a year and clock your speed for $1.
Me: Ugh, fine.
My dad never once said “No!” That would ensue in a fight. Teenagers, and even younger kids, are more logical than we sometimes give them credit for. My dad must have had the patience of a saint because he was always willing to discuss these little issues with me. But in the end, what did I gain?
Now when I look at purchasing an item that I think I need, or maybe just really want, I really break the item down into a bunch of questions I know my dad would ask. Are there any cheaper alternates, like the batting cage once a year instead of a baseball that clocks your speed and will probably break after 20 throws? To you this is a simple discussion. To a kid who is starting to develop his outlook on the world this is a very influential lesson.
Lesson #2: TINSTAFL, There Is No Such Thing As a Free Lunch.
Photo courtesy of D’Arcy Norman
Every now and then the aforementioned lesson would not work on me. But still, my dad never gave me an outright “No!” Every now and then he and I would discuss the merits of a particular purchase and wind up in a stalemate. And that is where we would stay. He never acted as if he had a mystical overpowering veto that would end all discussion. But at the same time he didn’t agree with what I was doing so I knew I needed to work for it.
If I trace my interest in business and entrepreneurship back I think it would all start at age 8. I wanted a new bike because my dad purchased me a Huffy and other people in my neighborhood had Specialized and Diamondback bikes. For those of you who do not know, a Specialized or Diamondback bike is usually leagues above a Huffy. Looking back I can’t blame him. I was a 8 year old who was taking my bike into the woods and building jumps that probably made my spokes shake in their sockets.
But I was determined to get a new bike. As I am sure you are used to hearing from your child, I needed it. I started informing all of the neighbors that I would do any work for them. I would shovel snow, cut grass, rake leaves, pull weeds, take out trash, or help with any other job they wanted assistance on. I once had a neighbor who paid me to lay new bricks along their front garden. It actually wound up being considerably hard work and I am pretty sure they got a bargain. I was getting money steadily. I decided to expand my business and started doing fresh squeezed lemonade and apple stands. I stole the apples from my neighbor’s tree and my dad made the lemonade for me. It was probably a losing proposition but I guess he just liked seeing me put so much effort into a goal. Sales were not good, my street had no road traffic. I went door-to-door selling this lemonade. (Note: This was a neighborhood where everyone knew everyone and my dad stayed outside as I did it)
After a few months I think I lost sight of my end goal. But I kept doing these jobs in order to get money because I liked having my little piggy bank full of money. Between all of the jobs I was doing around the neighborhood and all of the money I collected from the dryer I had enough money for a new bike within about 6 months. My dad reminded me at this point and we went to the bike store in town. I looked around and found the bike I wanted. I was sure it would be better than all of my friend’s bikes.
Let me guess what you are thinking… my dad either bought it for me or I wasted all of my money on it? Nope. I got gun shy and realized I was about to spend 6 months of hard work on a single possession that I would use to skid around (kill the tires), go off jumps (kill the shocks and spokes), crash into curbs (warp the wheels and bend the spokes), and otherwise just ruin it. I decided I wanted to save the money for something more deserving of my money. I kept my Huffy.
My dad did not make me work, he gave me the opportunity to work for something I wanted. By working I realized the value of a dollar and looked at purchases in a different way… even at a young age.
Lesson #3: The best time to plant a tree was 30 years ago, the second best time is now.
Photo courtesy of woodleywonderworks
What did my dad and I do a few days after I rejected the idea of buying a new bicycle? We went to our local bank, Bank of America. My dad opened me up a joint savings and checking account that only I would deposit and withdrawal from. My dad may have planted the idea in my head but I remember it as being my idea. I saw my dad go to the bank all of the time to get money and he had explained the concept to me plenty of times. I liked the idea of having my money locked up for safekeeping while still letting me access it when I needed it. The piggy bank was getting full, anyways.
I opened up my bank account and over the next 8 years I would give my dad money and a deposit slip anytime I earned some. He would take it to the bank when he was going for his own reasons. And that is where my life into personal finance really started… at the ripe age of 8.
My dad always made it clear that I wanted to have a safety cushion in that bank account. He would say things like “What happens when you are 16 and need a car?” Because of the TINSTAFL lesson the idea never crossed my mind that I was guaranteed a free car just for being born to the man. Now, he was not as rough as he may seem and he did wind up helping me out with a car. It was a used Dodge Neon. It also happened to be a hand me down from my sister. I got a great deal as I only had to pay for gas and insurance since the car was already paid off. Now that I look back at it, though, I am pretty sure my dad completely subsidized my car insurance payments. But the idea remained constant, he wanted to make sure I understood that nothing was free.
By the time I was 16 I had a few thousand dollars saved up. This was all earned through hard work and some holiday presents. I was continuously educated by my dad that I was ahead of the game and that everything I did now was worth tenfold down the road.
How well did these lessons carry on?
Once I got my car at 16 I went on to work part-time all throughout high school. I worked at a restaurant as a dish guy, bus boy, and waiter and Best Buy as a salesman after that. I started earning actual money rather than side money for little yard projects. I, just like any kid, made mistakes with my money. I don’t think I really needed that $800 sound system in my Neon (Best Buy employee prices, have you!).
But I continued to work and continued to save.
I wound up choosing a state school, the University of Maryland. Why? It was ranked in the top 20 for my intended major and I wanted to pay my way through school. I found accomplishment in not having to ask my parents for money.
I worked throughout college. The main job that paid for my school was running an exterior painting company. I made enough money in two summers to pay for 3 years of school plus a two month trip across Europe. I also wound up working for some other companies, one of them being UPS. UPS was HARD work but it looked great on my resume.
And what am I driving? A 2004 Hyundai Accent with 86,000 miles on it. Even after being in my career for a few years I have not caved to the pressures of my neighbors with Specialized bikes co-workers with brand new Mustangs.
I would say these lessons were pretty influential, what do you think? Did your parents teach you anything that you would add to the list?