If your dad taught you how to throw a baseball, change a tire or make the perfect omelette, consider yourself lucky. If he also taught you personal finance lessons, you’re really lucky.
Personal finance lessons can be some of the best life lessons a parent can teach a child, helping them to avoid a lifetime of debt and knowing how to wisely deal with their money.
The California Society of CPAs came out with a list of the best strategies for parents to consider when teaching their children about personal finance. Here are four personal finance lessons that you can hopefully thank your dad for on Father’s Day:
Budgeting basics of personal finance
By developing a budget, you can control your money and limit your spending and get a good start on your personal finances.
[pull_quote align=”left”]By developing a budget, you can control your money and limit your spending and get a good star on your personal finances. A good starting point for creating a budget is to list all of your sources of monthly income, and then list your estimated expenses for the same time.[/pull_quote]A good starting point for creating a budget is to list all your sources of monthly income — job earnings, savings and parental support — and then list your estimated expenses for the same time.
Realistically identifying your living expenses in advance can be tricky. If you are on your own, you will have to pay for rent and utilities as well as food. Even if you live with your parents, they might request that you pay them for room and board when you have your own job. If you are attending college, whether full- or part- time, there are tuition, book fees and other educational costs.
Also, consider expenses such as meals; entertainment; personal care items; laundry; telephone and Internet service; cab rides or car expenses; and clothes. Remember, budgets need to be flexible and can be revised after the first month or two.
Opening a checking account
Everyone needs a checking account. You’ll pay most of your bills by check, either the paper kind or through online transfers from your account to a biller such as a utility or a credit card company.
Try to locate a bank or a credit union near where you live or work that offers free or low-fee checking and has several convenient ATM locations to reduce out-of-network ATM fees. If possible, have your employer directly deposit your paycheck to your account. That will save you the hassle of having to deposit your paycheck in person.
Everyone should know how to balance a checkbook. It’s a tedious job, but it’s cheaper than bouncing checks and is a great personal finance lesson to learn.
For students who are attending college out-of-state, it is important to understand that out-of-state check deposits take a few days to clear. You might also want to invest in a software program that can track your payments and expenses as well as show you areas in which to economize.
Using credit cards wisely
With credit card companies aggressively targeting young adults, credit cards can be a major pitfall. Consider the pros and cons of using a credit card in your personal finances.
[pull_quote align=”left”]If you decide to get a credit card, be sure you understand how credit works and the importance of charging no more than the amount you can comfortably afford to pay each month.[/pull_quote]For example, having a credit card for emergencies and for building a credit history is a good idea. But for some, access to credit is an invitation to overspend.
If you decide to get a credit card, be sure you understand how credit works and the importance of charging no more than the amount you can comfortably afford to pay each month.
Consider using a debit card for everyday expenses and reserve the credit card for true emergencies. Debit cards can give you all the convenience you need but are limited to the amount of money in your bank account.
Smart spending and saving go together
You can keep spending under control by looking for low-cost entertainment. Also, joining clubs and organizations ensures that you will have something to do and someone to do it with, and the expenses are far less than what could be incurred on a weekend shopping spree.
Learn to comparison shop and economize. Clipping coupons, purchasing used goods, sharing cab rides, buying generic brands and renting DVDs instead of going to the movies are just some of the ways a savvy spender can save money.
Managing your personal finances is an important part of adulthood. Budgeting, smart spending and limiting credit card use are excellent lessons that will help lead you toward a healthy financial future.
Another mistake that can cost you thousands (generally a lot more) over your lifetime is having a low credit score. But you have the power to raise your score and build good credit. Click the link below to find out how.
What’s the best advice that your parents gave you about your personal finances? Share it with us below or on our social media pages!
Children today are not exposed to daily activities that enhance their money management skills, because their parents do not have the ability to manage their money.
Most Americans do not understand how money works. They do not have check books to balance. They also do not save for things they want. They pay the minimum amount listed on the online statement and do not know what the interest rate being charged on their credit cards. They should find out how much they are being paid on their ” savings” or retirement plans.
They are willing to pay for overdraft protection so they don’t have to wait until their own money is in their account to pay creditors who are charging them interest, because they do not balance their checkbook.
Earning a degree in college does not guarantee you will have common sense. But if you want a good job then you will need a college degree and a lifetime of debt. Most college graduates move back home because they don’t have enough jobs that pay the expected amount to be able to live within their means and pay the loans for the titles the they have.
My dad has continually talked to me about the debt he incurred to build his business and the farm, which was a very large sum of money. today he is about 70 yrs of age and still working at paying off the farm. his advice was to not fall into the trap of borrowing to finance your dreams or I would end up being a slave to the lender for the rest of my life. My parents have excellent credit but very little money. so I pay for the things I need in very short terms, as not to have the compound interest swallow everything I have. however, I believe that I should find some healthy ventures to have my money working for me. That’s what I have taken from my Dad. Thanks for sharing your stories…
Wish I had been taught like that.Had to learn on my on.Made plenty of mistakes along the way.
My Comment is never bite off more than you can chew. It was ten children in our family ,my father mainly worked with the daughters. He explain to us even though we were married never depend on your husbands salary. Get what your check can pay for. Once your home is paid for leave them paid for. As of today I see so many struggling trying to pay for their homes @ the age of 50’s 60’s and so on. Some are even losing their homes by borrowing money and getting the equity out of them. To each is own, But me personally I like my dad’s remedy ” Once you Pay for them leave them paid for.”
Well I dont have a story. I just wanted to that was very well put. thanks
I love the personal story you shared about your dad. I will allow my son to learn the value of a dollar in the same way. He wants to travel out of state for a youth conference. He needs $450.00. I will draw him up a contract and make him earn his way. Wow dad charged interest too. I guess that`s a good idea so he won’t procrastinate in paying back his debt. Thanks a lot for sharing.
I too…learned from my deceased father …much abt how earning & paying for impressive things pay off! Dad had already shopped for my first car for me & had me sitting in front of a “bank manager!” at the age of 15 yrs old! But I paid every red penny on my own…(to that bank manager)…for my hot,fire engine red ’67 Mustang! a few yrs later …i wanted a “new”car…after running the credit check…the auto lot manager…got up and walked over to me & said, Wow… I just want to shake your hand….my daughter works at a bank & don’t even begin to have credit as good as yours!” As my dad sat …listening & watching…was that big ole smile on my dads face because I learned a very valuable lesson so well from him at such an early age??? You betcha it was!!! Thank you for sharing your personal experience…& for the invite to share something personal as well.
Well I will tell you about my Dad, My Dad owner of a big Company. When I got out of Hi school I went to work for the company. Well pay day came around and Dad came into the office for me to cash his check. This was back in the fifties. Lets say the check was for 78.85. Well I gave him an even $80.00 . He said the check was for 78.85 , . My answer was (oh don’t worry Dad, the company is yours any way. ( That’s not stealing.) His answer was the check said 78.85 and that is how much YOU have to give me. I have never forgotten that lesson.
You may fill you had a hard time. but I never had a father at all I had to do it all by myself. Plus I had three younger siblings?, I may not have always made the right choices and heaven knows they weren’t but I did the best we could
What a great story about your dad. My father and mother lived through the depression. So they saved everything. They paid their bills together. My mother wrote out the checks and my father signed them. I can seen them both sitting at the kitchen table drink coffee in white mugs. Talking about their financial situation. They work together as husband and wife.