The screaming match or silent standoff -- I don’t remember which one it was now -- ensued because my dad was somehow informed that I had a $12 late fee for overdue library books. (Thanks, Mom.) Being 16 and relatively naïve about the importance of good financial standing and respecting deadlines, I didn’t see what the big deal was.
My father, on the other hand, proceeded to dive into a ridiculously long diatribe about how said library fine could have serious consequences – like making my credit score plummet. (I didn’t actually believe that a library fine could affect your credit until I read this article: 7 Weird Ways to Hurt Your Credit Score.)
Granted, in his vast financial knowledge he wasn’t seriously concerned about my credit score at the tender age of 16, but he wanted to teach me a lesson: all of my actions today could impact the kind of life I have later down the road. Rack up debt now and you could still be paying for it when you’re 25. (Thankfully babysitting allowed me to quickly pay off that astronomical $12 fine.)
This was just one lesson in a long line that my parents taught me about smart money management. Here are a few others.
Don’t buy more than you need.
When I was a kid we ate out often -- about 90% of the time – but my parents always made it clear that, unless it was a special occasion, we didn’t need to buy appetizers, drinks, and dessert at every meal. In fact, most of the time I would split a meal with my sister which still gave us plenty of food.
I still follow this rule of thumb which is far better for my wallet and my waistline.
Pay off your credit card every month.
My dad, being the financial stickler that he is, instilled in me from a young age that if you can’t pay off your credit card every month you can’t afford what you purchased with it. Ever since then I’ve seen my credit card as just another way of spending the money that I made – not a supplement to my income.
Now, as some of my well-meaning friends are paying of purchases from college that they now regret, I don’t have to give a second thought to debt-repayment.
Don’t co-sign – preferably ever.
This may not fit for every situation every time, but if someone is unable to get credit or make a purchase because of bad financial decisions or lack of income, it’s generally not the best financial decision to co-sign for them. Why? Because the chances of you footing the bill or your credit taking a substantial beating are pretty high.
Never spending money isn’t really a feasible plan.
Being a perfectionist, I took my parents advice to save to the next level by essentially socking away every penny that I was not forced to spend on bills or other necessities until about the age of 23. In the process I gave up several chances to have awesome life experiences – experiences that cost money.
Since then they’ve taught me that money is a currency that is meant to go in and go out. While you can be smart about how it goes out, hoarding it can essentially stop the flow of abundance and keep you from having awesome experiences you won’t regret in the long run.
Money is not a dirty word.
Perhaps people wouldn’t feel so alone in their financial struggles if we didn’t feel so uncomfortable as a society discussing them. Or, better yet, maybe less people would have financial struggles if we started the conversation from a young age.
My parents talked about money casually (although my dad did decline to tell me the cost of our house when I asked at the age of 7), which made me want to be informed. Our conversations were frank – not peppered with negative statements about how money doesn’t grow on trees, etc.
What did your parents teach you about money? Which lessons will you or have you already shared with your kids? I’d love to hear your feedback.