What did your dad teach you about money?
After all, as your father probably likes to remind you, he was earning and spending money long before you were born. Mine taught me the importance of reaping credit card rewards, storing tax documents, and saving money for a rainy day.
Every father has their own take on managing, earning, and saving money. Here are five financially savvy dads and their top tips for the next generation to live by.
1. Dave Ramsey: Put in the work
Best-selling author and famed radio show host Dave Ramsey has given personal financial advice to millions of Americans. His advice for some of them echoed what he and his wife often told their three children: You have to work for what you want.
“Have you ever met an adult who sits around and whines, feels entitled, and becomes a perpetual victim?” Ramsey asked. “I have. It’s not attractive.”
Ramsey stressed the importance of earning money for your “needs” and “wants” in life. His kids, for example, started baby-sitting, walking dogs, and mowing lawns to help buy their first cars.
“It was really cool to see our kids’ work habits develop as they got older and they began making money outside the home,” Ramsey added.
When you’re concerned with a tall task such as cleaning up your debt, you might forget one of the most important ways to do it: Increase your income with your work ethic and smarts, whether you’re jump-starting a career or starting a side hustle.
“Work, get paid,” Ramsey said. “Don’t work, don’t get paid.”
2. J. Money: Track your net worth
Track your money from day one.
“Seeing others publicly display their [net worths], as well as their rationale, was the main reason I decided to start blogging myself,” he said. “[I] haven’t missed a month of tracking my money since — 124 months in [a] row to be exact, but who’s counting?”
For J. Money, tracking his net worth starting in 2007 was paramount to his personal success. He had bought a $350,000 house “on a whim” and needed to focus his finances.
“Nothing else will help motivate and keep [you] on track more so than doing that,” he said. “It allows you to always know where your money is at any given moment of time, as well as forces you to double-think all your purchases … knowing that each one will positively or negatively affect your wealth.”
J. Money said he’ll teach his three boys, all 5 or younger, to start “tracking all their pennies.”
3. Dime Dad: Start investing early
You might think of compound interest as that evil concept that allows your debt balance to grow. Caden Rhoton, founder of Dime Dad, would remind you that compound interest can also work in your favor.
Rhoton started to appreciate the power of interest after getting his first post-college job.
“One of the first things I learned was that I could’ve been investing for years,” he said. “I didn’t have a ton of money, but every penny I owned was sitting in a checking account doing nothing for me.”
Rhoton began contributing to his company’s 401(k) plan. Then he educated himself on index funds and opened a Roth IRA — also known as an individual retirement account — and other brokerage accounts.
He kicks himself for not starting to invest even earlier in life, but he won’t let his young children make the same mistake.
“This tip is valuable because the earlier you begin to invest money, the better,” Rhoton said. “Compound interest starts to pick up steam many years down the road, and the earlier you start, the longer you’ll be able to reap the rewards.
“From the ages of 8 to 16, I will encourage my kids to save their money in the index fund DAD,” Rhoton added. “I will hold their money and offer them 10% annual interest.”
4. Scott Eichler: Create healthy habits
Seasoned investment adviser Scott Eichler wouldn’t disagree with Rhoton’s tip. He’d merely expand it to every other corner of your life. In his mind, you create financial health through habits, the same way you’d become happier emotionally or get in shape physically.
“After being in the financial industry for about a year, it became as clear as the nose on my face,” Eichler said. “There was only one thing that separated the wealthy from everyone else: habits. It wasn’t intelligence, income, network. The families that had good financial habits had money.”
Eichler, author of “Don’t Play Chicken with Your Nest Egg,” goes home to four kids between ages 3 and 15.
“My kids understand the idea, but they are young,” Eichler said. “I hope they maintain the habits that I’m trying to instill in them. My 15-year-old daughter has nearly $2,000 saved for retirement, so they are clearly going in the right direction!”
5. Eric Ridley: Don’t abuse credit cards
As a personal finance attorney, Eric Ridley has seen high credit card balances. Often, his clients are struggling with debt and wondering where they went wrong.
To Ridley, they committed the original sin of rolling a credit card balance over month to month, letting high interest rates take over.
“Treat credit cards as something to use to increase a credit score, not to buy things that [you] couldn’t otherwise afford,” said Ridley, who works partly on bankruptcy and student loan cases. “In other words, if you can’t pay cash for it, don’t put it on a credit card, and set your cards to pay the balance in full, every month.”
Ridley is also the father of three men between ages 19 and 24. He said each of them is on track for building strong credit.
“All of their credit cards are set to autopay the full amount,” he said. “I’m extremely confident that this lesson has sunk in [for them] because I can see it playing out daily.”
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
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|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|