6 Financial Tips You Can Learn from Your Parents
Hi everyone. My name is Adam Stewart, Debt Collection Expert and owner of Debt Recoveries Australia.
It’s Father’s Day this weekend. It reminds me of my own dad, who passed away about 6 years ago.
My parents split up when I was very young, so I didn’t really get to know my Dad that well. What I do know was I never seemed to go without anything as a kid. I know that he did the best he could for my brother and I while we were growing up. We both have very fond memories of holidays up on the Sunshine Coast in Queensland and camping trips down in South Western Australia.
If you are lucky enough to have a mum or a dad with the knowledge to be able to teach you about money management, I would encourage you to go to them and ask them how they manage their money. Start a conversation with them. You may be surprised how much knowledge they have accumulated.
I didn’t really have any financial or money management mentors as I grew up so I had to teach myself a lot of these things that will follow.
So here are my top 6 financial tips that you can learn from your parents:
1. Be the first to ask.
One of the first things you can do is just have a chat with them. Ask them how they manage their finances: Do they save? How do they save? How do they pay bills? Do they have outstanding debts? Do they have a financial planner? What finance tips can they give you? Keep up with the questions and ask for their help.
2. Ask them for real life examples.
Nothing beats real life experience if you want to learn more about money. If your parents have bought an investment, such as real estate or a share portfolio, ask them how they got started, what was their initial investment, why they chose that particular area of investment.
Once you have a real-life example of how your parents have managed to purchase a house or build a large share portfolio, it may spur you on to start saving!
3. Ask for help with your financial plan.
Just 6 in 10 baby boomers have money saved for retirement, according to a recent report released by the Insured Retirement Institute. Of those who do, 9 in 10 work with a financial advisor who has helped them establish a strategy to save for their golden years. So ask your dad or mum how they planned and ask them to help you with yours.
One of the biggest mistakes people make with their retirement is to put off looking at what is needed for retirement until it’s pretty late in the game. Start early and ask your parents when they started and how they did it.
4. Automation can have huge results.
Younger baby boomers have three times as much stashed away than do boomers age 60 or older, according to a recent survey. The difference between the two groups? The former is more likely to have access to a retirement plan, which allows them to automatically set their savings strategy.
Ask your parents what their “set and forget” strategy is, assuming they have one. The ‘set and forget’ strategy has been proven over and over again. Pick the amount to put away, pick a good mix of shares or an automated portfolio, and automate it.
5. Ask them about real estate.
For many Australians, it’s the great Australian dream to own your own home. Because of this, a lot of Aussies have a significant amount of their capital and money tied up in their own home. So real estate has a large effect on their overall wealth and potential retirement income.
Discuss with your parents if owning a home is a good thing or not. Ask them to explains the pros and cons of renting versus owning and ask them to explain why they have made the decision to do either.
Some parents have done really well because the mortgage is paid off and the home is valuable. Ask them how they did it and what approach you should take. They may even be willing to help you out with your first loan.
6. Ask them how to manage debt.
Finally, ask your parents how they manage debt. You may already have gotten into trouble with a credit card or an outstanding debt, so ask your parents what you should do or what they have done in the past. The more you have to pay out to your monthly debtors, the less you’ll have to live on — which is something your parents may have to deal with if they are retirees.
Unlike previous generations, retiring boomers are entering retirement with debt, so ask them how they are going to cope with that and perhaps you can set a strategy in place to make sure you are debt free when you retire.
M. Grundler said, “The best inheritance a parent can give to his children is a few minutes of their time each day.” As you did before and now, get your Dad or Mum’s (or both) wisdom in managing your finances. It will surely help you as you go along in this life.