Financial Wisdom from Dad: Practical Tips For Father’s Day

Like many of us, I learned some valuable money lessons from my parents. As we observed them handling money over the years, their financial habits have left a lasting impression. My dad’s advice has also influenced many of the financial decisions I have made in life so far. Therefore, in honour of Father’s Day, why not celebrate the financial wisdom of my dad? From good debt to saving strategies, here are some of the best financial tips I learned from him along with some insight into why his advice is worth following.

1. There’s Good Debt and Bad Debt

Not all debt is created equal. Dad always said, “There’s good debt and bad debt: are you buying an asset or a liability?”. Bad debt is when you borrow money for things that don’t increase your wealth. For example, using a credit card for a shopping spree for new clothes is buying a liability. You’ll take on debt or you must repay over time. While we need to carry debt for certain purchases, some simply add financial risk and negatively affect your cash flow. Good debt, on the other hand, is when you borrow money for investments that can make you richer, like buying real estate that you can rent out or a tool you can use for your business, such as a new computer, or a new suit for a job interview.

Tip: Before taking on any debt, think about whether it will improve your financial situation in the long run. Are you buying an asset or a liability?

2. Leverage Equity

One of the best pieces of advice my dad gave me was to “Make your money work for you, not against you!” He believed in leveraging the equity in assets to boost overall wealth. For example, buy real estate, rent out rooms to cover the mortgage, and then capitalise on the property’s increased value by using the equity for more investments.

Tip: Don’t let your money sit idle. Look for opportunities to invest wisely and make your money grow.

3. Be Financially Independent

Dad stressed the importance of financial independence. Making your own money gives you stability and security. Having your own income also means you don’t have to rely on others during tough times. Dad suggested advised keeping separate bank accounts from a partner to maintain some autonomy, but also having a joint account for shared expenses.

Tip: Foster financial autonomy while also maintaining open communication about shared financial goals with your partner. Communication about big-picture finances is crucial for a successful partnership.

4. Save Save Save!

He encouraged me to save money regularly and not wait until I was debt-free before starting. He said I should always pay myself first and set up a bank account that automatically deducted a set amount every month before I pay my bills and use my money in other ways. Dad told me I should be prepared for financial emergencies by keeping at least six months’ worth of expenses saved up. He also suggested having multiple savings pots around the home for spare change; even a little bit each month can add up over time. He gave me another helpful tip when I was saving to buy a car. He said that once I had paid it off, I should keep putting that money into a savings account so that by the time I needed a new car, I’ll have money saved for it and hopefully not need to pay interest. This was advice that paid off.

Tip: Pay yourself first and aim to have at least six months’ worth of savings in an emergency fund.

5. Don’t Spend Money You Don’t Have

My dad was always telling us to, “Stop keeping up with the Joneses!” He believed in living within your means and not comparing yourself to the ‘so-called’ fabulous lives of others. He said we should avoid the temptation of extravagant spending trends, especially if it involves using credit. While using cash for everything might not be practical today, he stressed setting strict budgets and reviewing finances regularly to avoid falling into a debt trap.

Tip: Avoid living beyond your means. Social media can make you feel pressured, so just try and ignore it and stay conscious of your spending habits.

6. Pay Your Bills On Time

Paying your bills on time helps you stay on top of your finances and stops unnecessary debt from late fees and high-interest rates piling up. Freeing yourself from debt faster provides some financial breathing space and reduces stress in your life.

Tip: Set up reminders or automatic payments to ensure bills are paid on time.

7. Set Financial Goals

Whether it’s saving for a dream car or planning for retirement, setting clear objectives, and making a plan to achieve them will help turn your dreams into reality.

Tip: Set specific and achievable financial goals and create a plan to reach them step by step.

8. Seek a Professional’s Help

Dad advised seeking the help of a financial advisor, which turned out to be a game-changer for me. A good financial advisor can help you manage your money wisely, make sound investment decisions, and plan for your future.

Tip: Consult a financial advisor to create a tailored plan. It can make a significant difference in your financial journey.

Father’s Day on a Budget: How to Celebrate while following Dad’s advice

Father’s Day is about showing appreciation for all that our dads have done for us. But celebrating this special day is not about how much you spend; it is the thought and effort that counts. In my family, we also had to be careful not to annoy Dad by wasting money on gifts he didn’t really want or need and “giving in to commercialism”. So, even though Father’s Day has become quite a commercialised occasion and you might feel pressure to buy ‘stuff’, it really is the thought that counts. Here are some creative and thoughtful ways to celebrate Father’s Day and show your appreciation for your dad, grandad, stepdad, uncle or even your ‘work dad’.

Spending Quality Time Together Is The Best Gift You Can Give

Have a Day Out

Plan a day out. Enjoy a picnic in a local park or beach, take a walk in the bush, or visit a nearby museum or art gallery (many offer free entry).

Fun Times at Home

You could even offer to help Dad with some of those jobs he always wants to do. Why not organise a working bee and clear out some stuff, build some vegetable gardens or even clean out the guttering? Or you can offer to do something he usually takes care of, like mowing the lawn or washing the car. Sometimes, a small gesture can go a long way. And you could do all this while still letting him be the boss, of course. Better yet, you can beat Dad at his own game with a corny joke or two!

Treat Your Dad To A Fancy Night At Home

Spend quality time with dad cooking a meal together. It can be a fun bonding experience. Then invite family or friends over to celebrate together. Sharing laughter and stories with loved ones is a priceless gift for any father.

Wrapping Up

Dads provide many of us with valuable financial advice and guidance, shaping the way we handle money throughout our lives. By embracing the wisdom they’ve shared, we can show our appreciation on Father’s Day while still staying true to their financial values. The bottom line is it is not about how much you spend, but the love and effort you put into making the day special for your dad. No matter what you choose to do, quality time is always a precious gift. So, put away your phone, be fully present, and create lasting memories.