How To

Personal Finance Lessons From Dad

Although he’s no longer around, my father’s lessons on living within my means are a big part of why I’m able to freelance instead of working in a cubicle.

To him, though, living within your means didn’t mean going without. When I desperately wanted the Grease movie soundtrack on CD but didn’t have enough money, he marched me over to the cassette tape section and found a Grease recording for half the price of the CD. Though I’d hoped he’d just buy me the CD, him not buying it was a gift it itself because it taught me to be self-sufficient.

In honor of Father’s Day, here are some money lessons that our dads have taught us over the years.

Avoid debt whenever you can.
Tommy Landry, 40, of Austin, Texas, says his father frowned on any type of debt, particularly credit card debt. “I remember him saying, ‘See that house? Would you rather pay $100K for it now, or $250K for it over 30 years?’ I didn’t understand how that worked as a teenager, but boy did I do my research!” Landry and his wife still follow this rule, paying off their credit-card balances every month and only buying what they can afford. “The only exceptions are large-ticket items like our home and vehicles, which can be financed at low interest rates,” he says.

Along those lines, Barry Maher’s dad taught him that he should buy a car only if he can afford to pay for it in cash. “With the thousands you’ll save in interest, you’ll be able to buy for the car you want that much sooner.” The 62-year-old Corona, Calif. resident estimates this advice has saved him over $30,000 in interest over the years.

Sometimes it pays to pay more. 
Growing up on a farm in North Dakota, now 52-year-old Nancy O’Neill learned the importance of quality work, even if it costs a little more. “Dad taught us kids and everyone else he meets to ‘do it right the first time even if that means spending a little more money because it will save you even more in the long run,’” she says. “It drives him nuts when he sees these young farmers try to constantly ‘patch’ things. If they spent a little more and did it right the first time, they wouldn’t be wasting their money over and over again.”

Waste not, want not.
For better or worse, the habits we learn in childhood can follow us for the rest of our lives. Barbara M. Haig, 50, of Milwaukee, says her Dad used a clever trick to teach his kids to conserve electricity. “My dad always warned us that he would charge us a nickel for every light we left on in the house,” she says. “I don’t think he ever made good on the threat, but it formed a lifelong habit of turning lights off as I leave the room.”

Take your credit score seriously.
Thanks to her dad’s money lessons, Kaela Harmon, now 27, bought her first home at the age of 23. “During my college years when credit card companies were throwing free T-shirts and pizzas at us, my dad made a point of emphasizing to me the importance of keeping my credit score intact,” she says. After college, Harmon’s parents encouraged her to buy a instead of renting. “The year after I purchased my home, the housing bubble burst and people found themselves the victims of ARMs and other mortgage messes,” she adds. Not Harmon. She was actually able to refinance her mortgage and lower her payments even further.

When negotiating salary, make the other person name their price.
When Christine Shuck, 40, of Kansas City, prepared for job interviews, her dad reminded her to “Make them say a number first.”

“Every time I [followed] that advice I found myself in a position of power and the ability to negotiate a higher amount,” Shuck says. “Every time I didn’t, I got paid a lot less. Dad definitely knew what he was talking about!”

That advice can also work when you’re haggling over prices.

Money doesn’t buy happiness.
Danny Kofke, author of How To Survive (and perhaps thrive) On A Teacher’s Salary, says his dad taught the family that “having a high-paying job doesn’t always make you rich.” Kofke’s family only had one car and lived in a smaller house than many of his friends. But “we always felt wealthy,” he says. “We did a lot of family things together and focused on what we had rather than what we did not have.”

Kofke’s dad also helped fix things around the house instead of calling a repairman. “A few years ago we needed a new garage door installed. He helped me do this and, thus, I saved around $500,” he recalls.

Susan Johnston is a Boston-based freelance writer who covers business and lifestyle topics.