I would say that the two most common comments that my clients make to me in my office are “My parents never talked to me about money” and “Your parents must have talked about money with you a lot for you to know what you do.” I absolutely credit my parents for my money know-how, but what people have to understand is that it isn’t always what you SAY but what you DO and model for your family. My parents have always led by example, and I am very thankful for the example that they set. I would like to share some of what I learned from them with you as it has served me pretty well in my life.
- Cars are a mode of transportation. Hence, the most important consideration is “Does it get you from point A to point B safely?" If so, it is serving its purpose. My family’s philosophy on cars has always been buy used cars for reasonable prices, take good care of them, and hope for the best. I understand used cars can sometimes be a gamble.That’s why buying them for the right price, maintaining them well, and knowing when it’s time to move on to something else is key.
- More wisdom on cars: If you must take out a loan try to put down a sizable down payment without cleaning out your emergency fund to lower your payment. Finance the loan out for the five years to make sure the payment is manageable, but, by all means, pay it off as quickly as possible. Lastly, even after you pay it off, continue making that payment to a separate “car fund” for as long as you are able. This will give you money for repairs, and, when it is time, a down payment on something else. You are already used to making that payment so you may as well build up an additional cushion.
- There is a definite difference between a “need” and a “want.” I remember being a kid and always wanting the name brand clothes and shoes. I also remember being really irritated when my parents told me shoes were shoes. But I am so thankful now that they stood their ground. While there is nothing wrong with splurging every now and again, if you make that a habit it can really get you in trouble.
- If you make being careful and smart with your money a priority, it will pay off in so many ways. I always watched my parents save money wherever they could which gave us the freedom and ability to take care of what we needed to when it came up (and a little extra for some fun too!).
- Having a financial cushion provides a sense of security. While no one “enjoys” carefully accounting for their money or saying "no" to their wants or those of their family, it gave all of us a sense of security and peace knowing that we had a cushion in case something unexpected happened. Seeing it work so well for my parents when I was young made me want to strive for the same for myself. Besides, it is much better to be able to “borrow” from yourself!
- Buying and/or receiving stuff doesn’t equal happiness or love. While it is nice to buy things for people sometimes, the emphasis in my household is always on spending time together. Those are where the memories are - my mom spending hours upon hours teaching me how to craft or my dad dropping everything to take me to see the Stanley Cup, for example.
- Life is not a competition of who has the most or best stuff. It is about who you are and what you do. We often compare ourselves to others based on what we have or don’t have and what they have or don’t have. What we must remember is we don’t know the whole story; for all we know, they might be struggling with a large amount of debt to keep up the appearance that things are going well.
- Life is about sacrifice and compromise. Sometimes you have to say no to something in order to say yes to something greater. For instance, in some jobs there is high pay but it may come at the cost of time with your family.
- “Lifestyle inflation” is very real and something we have to watch out for. Have you ever wondered to yourself how you made it on the income from your first job? I do and when you really look at it you realize that back then you made it on what you had because you had to.Sometimes it is helpful to look back and take note of what we trimmed or cut out to make everything fit. If we could do it then chances are we could do some of it now to free up some funds for other purposes or goals.
- Never loan something to someone you can’t afford to lose - money or possessions - as it might result in the loss of the item/money loaned AND the relationship.
About the author
Alicia Kellebrew is a NFCC certified financial professional with The Village Financial Resource Center.