From a young age, my parents always told me how important personal finance was a key component to a stress free life. About once per week, I could always remember them giving me some type of financial iteracy knowledge that I often use today.
Going to the bank or store were always opportunities for them to teach me something. Today, I appreciate and share on the knowledge they gave me for budgeting, investing, and saving money.
Here are the top basic financial tips they gave me, that I continue to share with other people.
Money doesn’t grow on trees
I’m sure you have heard this common expression before that money does not grow on trees. The idea is that money is a limited resource and is not easily attained, thus you should not spend it carelessly. A tree starts from a tiny seed into a fully grown tree. This process alone can take several years and for some trees, even a lifetime of a person. But, when it is fully grown, it flourishes with plenty of food, leaves, and fruits!
This is what the saying points out, that money does not easily come to life. Someone must work hard for it; you simply cannot go to your backyard tree and get money. Even if someone will work hard for lots of money, what are you going to spend it on? You must be careful to not spend on useless things. The main takeaway is to be smart with saving money and planning for the future!
Consulting a professional like an accountant or CPA is always the best advice.
FOMO (Fear of missing out) is okay. I can sit at home.
If my friends ask me to go somewhere. My parents always told me to not feel obligated to go out.
I see myself sharing this same financial tip with my children.
It is okay to occasionally skip out on gatherings if it requires money you don’t have. Money can be hard to come by. If you don’t budget correctly, that night out for dinner and drinks can lead to a missed car payment.
The fear of missing out is not as bad as it seems. Stay off social media for a bit and immerse yourself in a book, hobby, or game.
It’s okay to miss out on some events or gatherings from time to time. Especially if it costs money that you don’t currently have.
Be smart with the career I choose.
Another lesson that my parents taught me is to make a conscious decision about my career goals.
We are in a rapidly changing society and careers fade in and out all the time.
Take a bank teller for example. Bank teller positions are being replaced by online banking apps and ATMs.
Or how about a retail manager? Retail associates and managers are being replaced by automated grocery machines and eCommerce.
If you are passionate about something that does not bring in a lot of money or is hard to get into like (music, sports, etc.). Make sure you have a backup plan to fall back on it doesn’t work out. Because let’s face it, only certain people will make it to the top on these fields.
But, if it does work out then great! Congratulations! Always keep in mind that reaching the top is only half of the battle, the other half is maintaining that spot.
College may put me in debt and financially constrain me for most of my life.
My parents always told me that paying for college was going to be the biggest deterrent to me having financial independence. Considering my parents weren’t going to be able to help me. They stressed to me the importance of thinking about how I would finance my education.
You must acknowledge that school is very expensive. Loans typically take 10-20 years to pay off.
Consider your options. Are you going to take a loan? Scholarship? Or pay in full?
Asking these questions is important. You want to have a plan and a course of action that propel your life towards being debt-free.
For most people, grants are the best option. If grants are not available, consider applying for scholarships. And if either one of those options isn’t available. It’s best to fill out a financial aid application through FAFSA.
Renting is okay. I shouldn’t feel obligated to buy a home.
Once you reach your mid 20’s, you might start to notice that your close friends and associates are buying their own houses. For some of them, this might be the right choice but that doesn’t mean it applies to you. It is okay to be renting a home rather than buying it. Do not ever feel like you are obligated to buy a home. Do what’s best for you.
Sometimes it makes more sense to rent than to buy. In most markets, the general rule is that if you plan to move within five years, rent a place. You can use a rent vs buy calculator to help you determine the break-even point.
Pursue entrepreneurship if I have the passion, time, and money.
Pursuing entrepreneurship can be daunting and scary. But, if you still have the time and money to do it. Then you should go for it especially if you are very passionate about your chosen craft.
Being an entrepreneur does not mean owning the next Amazon, it can be as simple as owning a small coffee business. Owning a business allows you to be flexible with your hours and be your own boss. Numerous benefits come with being a business owner, but one thing is for sure. You can never succeed without trying.
Spend money on traveling, not things.
Nowadays, people focus on materialistic values. Unfortunately, this is how we judge other people’s values versus ourselves.
Scrolling through social media can make you envious of the superficial things other people have. Or claim to have for that matter.
Fancy cars, big homes, and nice cars are all examples of things that are nice, but unnecessary.
But will these materialistic things arrive on your deathbed? Nope.
One thing I have learned is instead of spending money on “things”, I should be spending it on “experiences”. When I say spending things on experiences, I am talking about spending it on memories that will last a lifetime. Memories I can ponder on and share with other people. One of these memories is the experience of traveling the world and exploring it and what it has to offer.
Pay taxes and don’t cheat on them.
As we all know, paying taxes on time is very important and if we don’t pay on time, we can receive harsh punishments. Yet, we sometimes pay our taxes late or for some quite literally not paying at all. Paying taxes on time is not only beneficial to you but for everyone else around you. It helps build the nation, improve healthcare and education, and many others.
The penalties for not paying taxes can be severe. Jail and fines are typical punishments for not paying taxes. This is not something you want to risk.
Honestly, this is probably one of the best financial tips.
Big weddings are a complete waste of money.
In movies and social media, we see someone spending tons of money on having a big wedding and huge guest lists. However, this is often unrealistic for most of us. It’s much smarter and safer to just save the money for a small celebration with close family members. Or opting to spend the money on the honeymoon instead.
Another alternative is to simply save up for the long-term. For instance, moving expenses, buying your own home, or savings for your kid’s college fund.
When you get older you will not be pondering upon the memories about how much you spent on your wedding. Rather the experiences and memories you have made with your close friends, family.
Only use credit cards that offer points.
My parents always stressed the importance of staying out of credit card debt. They said that it’s very easy to get into credit card debt. Mainly because of how easy it is to use the card. Just swipe, swipe, swipe.
My mom always said to get a credit card that offers rewards points if I ever did decide to get one. This way I could benefit not only from increasing my credit score by making payments on time. But also get rewarded for my charges. Some credit cards have rewards like cash back, travel, and merchant coupons.
The point of the story is to always research and be smart about which credit card you pick.
Share these financial tips
My parents were right. These personal finance tips that my parents told me are ones that I share with others. I often hear from them, “I told you so.”