Financial Lessons from My Father
Happy Father’s Day to all the Dads out there. My father, more than anyone else seems to be the person that has exerted the most influence on my personal financial plans. Although never earning a huge salary, my dad has always planned well for the future and now, in retirement, has a comfortable combination of a pension, social security, and additional private savings. In fact, we often exchange investment tips or ideas. Here are some snippets from my Dad’s investment philosophy:
–Invest in the future — my Dad has always been big on education, encouraging my brother and me in our college and grad school endeavors. He did however, caution me not to get into too much debt as an undergrad (this was 25 years ago), advice that I think is quite sound for 20 somethings today.
--Don’t let others around you influence your habits — Both my parents grew up in relatively modest circumstances which translated into living frugally most of the time, and saving money consistently. I think one of the major keys to this was not trying to keep up with the neighbors for things we didn’t need.
--Monitor risk levels — when the market crashed in 2008, my Dad, who by this time was retired, sustained minimal losses. As he was in retirement, he had already shifted his assets primarily into bonds and CDs, helping to preserve the overall value of his portfolio. Several of his friends, although of the same age bracket, were not so fortunate and their portfolios were down sharply (40-55%). This meant that as the market was hitting its cycle lows, they panicked a bit and shifted their shrunken portfolio to bonds.
–Have a plan — now, in retirement, my Dad watches CNBC and reads investment information as a hobby. This also means that he has a plan for his investments and isn’t easily swayed by the newest investment fad or flavor of the month. I think this more than anything else, has helped his portfolio to perform consistently.
I would love to hear of financial planning lessons that others have picked up from their fathers.
shared at this week’s Carnival of Personal Finance
[...] ElizabethG from Modern Gal presents Financial Lessons from My Father. [...]
This is a great story Elizabeth. You are lucky to have someone to encourage you to save and invest. Most people aren’t so lucky. I was fortunate that both of my parents and my step-dad were all very sound financially. So, I learned a lot from them. Sometimes, the example and encouragement are more important than the investment knowledge.
Bret, I think setting a good example is really important. Hopefully as more people become fiscally responsible following the housing bubble, they will have more examples around them.