First of all, to all of the dads out in cyberspace, "HAPPY FATHERS' DAY!".
Anyone who has gone through the public school system in the United States knows that there is very little practical education regarding personal finance. I certainly can understand why this is the case. Schools are under pressure from the powers-that-be to satisfy the requirements of so many interest groups. Schools have to make sure that children are instructed in so many random things as dictated by society (anti-bullying, condoms, the pledge of allegiance, nutrition, evolution v. creation, etc), while making sure they learn enough to pass the myriad of standardized tests, and still giving them the recess time that they need so they don't become obese. The pressures on school systems to squeeze all of this into a six hour, 180 day school year is intense. It is not surprising that personal finance falls through the cracks.
That is where dads come in (moms, too, but today is Fathers' Day so you moms will have to wait your turn).
My dad never sat me down for "the talk" (the personal finance talk, people - not the other one). However, he set an example for me and my siblings when it came to money matters. It was inevitable that we would learn from his wonderful example.
1. Don't skimp on education:
My father was very well educated. He started off by earning a BS in Mathematics, followed by his MS in the same discipline. Then, he went on to earn another MS in Meteorology (from M.I.T if I may brag). Now many of you might wonder how he paid for all of his education. He must have saddled himself with quite a few loans, right? Wrong. You see, my father was in the Air Force, so his education was paid for through his service to our country. The second MS degree was paid for by M.I.T. as part of a graduate fellowship. By the time he was done, he had zero loans.
Now some might say that he was fortunate to have these opportunities. I strongly disagree. His military service was during the Vietnam War when such service could be dangerous, if not deadly. He paid for his degrees not with money, but by being willing to make the ultimate sacrifice, if it came to that. In my mind, it was the least the U.S. Government could do. Now not everyone qualifies for military service, so this avenue might not be available to all. The point is that there are ways to get an education for those who are willing to work, whether it be through scholarships for superior achievement, or part time studies while working, or other means.
2. Hard work is rewarded:
In his career, hard work paid off for my father. At a time when it was common for people to stay with one job over the entirety of their career, my dad jumped around from job to job quite a bit. This wasn't because he was fired a lot; it was because he was always on the lookout for the next great opportunity. Most of these opportunities came via people with whom he had worked previously. When they had a need for somebody, my father often was the first person who received that call. At the peak of his career, he was Directory of Engineering for a telecommunications company. How did he get that job? The President of the company was his former manager from one of his previous jobs. He didn't need to send out a thousand resumes to get that position. His former boss remembered what a great worker he was and offered him the job based upon that.
3. Live Beneath Your Means:
My dad wasn't one to spend a lot. Growing up, we only had one car (until my mom went back to work, but that is another story). Interestingly, it didn't seem like much of an imposition. For short trips, we walked. For slightly longer trips (like to get to my piano lessons), I rode my bicycle. For even longer trips, we took the bus which went through our town. The funny thing is that, looking back, I really don't feel like I missed out on that much. Having one car seemed "normal" to me, because I didn't know any better. We were able to survive just fine. Living beneath your means is easy, once you get used to it.
4. Stay out of debt:
My father was never a big credit card guy. Every week, my parents would withdraw whatever spending money we needed from the bank and stick in an envelope. They had to ration that money wisely because once it was gone, that was it until the next week. I remember my parents wanted to buy a piano for the house because they had this idea that all of us kids ought to learn how to play (this goes back to don't skimp on education). In this day and age, most people would put it on a credit card and pay it off. However, my parents put aside some of their weekly budget money every week. They only bought the piano once they had put enough aside.
My dad did the same thing with cars. I don't think my parents ever bought a car on credit. If they needed another car, they would buy whatever car fit their budget. We never had a flashy car like some other families, but we owned all of them free and clear. In fact, I think the only debt my parents ever had was their mortgage, and even that was paid off as quickly as possible.
5. Andrew Tobias:
When I was in college, I was starting to think about grown-up stuff like investing and the like. I tried to educate myself, but it was overwhelming to say the least. There were so many options: stocks, bond, munis, CD's, etc. How do I start?
Since my dad seemed to know a little bit about this topic, I started asking his opinion on what stocks I should buy. My dad wasn't one to lecture you about stuff. His teaching style was more along the lines of "I'll point you in the right direction and you figure it out for yourself". To that end, he didn't answer my question about stocks directly. Instead he took a book off of his bookshelf, handed it to me, and suggested that I read it. That book was The Only Investment Guide You'll Ever Need by Andrew Tobias. He couldn't have pointed me in a better direction. Tobias has a very simple philosophy which is mirrored in my father's: be frugal, educate yourself, slow and steady investing, no-load mutual funds. After a read it, my dad winked at me as if now I knew his "secret".
Thanks to my dad's gift of this book recommendation (he didn't actually give me the book - talk about frugal!), I felt like I knew enough to get myself started. While I have read other investment books, I always find myself returning to the teachings of Tobias.
Now that I have children of my own, my challenge now is to set an example for the next generation about how to handle money. Hopefully, I will be able to live up to the high standard set by my own dad. Here's to you, dad!
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