Happy belated Father’s Day to all the dads out there! My dad is one of my favorite people: he’s wise, fun, kind, handy — simply put, he’s the best and I love him a lot. The other night, we had my parents over for dinner to celebrate my dad’s birthday, but also to thank him for holding this dresser in his storage forever. Everything was at my dad’s request: spaghetti, salad and chianti (an Italian red wine). As someone who loves spending time with her parents, it was a great night.
Here is me and my dad doing the Father-Daughter dance at my wedding. We made sure to keep it peppy, dancing to "My Girl" so we wouldn't bawl our eyes out. So we laughed instead. It is a memory I will always cherish.
At one point, we got to the topic of finances and saving money. I’m more of a saver than a spender, and while that has to do with my personality, it also has a lot to do with the financial education from my parents. In particular, my dad broke it all down by a simple demonstration. And that Saturday night, Matt was a fresh audience for said demonstration. How does one learn the way to financial freedom? Why, by with a pen and two pieces of scrap paper. (Really, you only need the pen to show that your scrap pieces of paper are money.) It’s a bit hard to explain in pictures, so bear with me.
Before I break this down, please keep in mind that like any advice it may not directly apply to everyone. Consider the principle behind the lesson. Yet, I would encourage those whose first instinct is to make an excuse — we don’t have enough money to save, I don’t have anything for which to save, my debt is too great, etc. — to take a critical look to see if those excuses are truly valid. They could be keeping you from financial freedom!
Exhibit A: The monthly income of a Spender (blue) and a Saver (orange).
Exhibit B: Each begins to pay their bills by what’s most important to them. The Spender thinks his bills are the highest priority, so he pays them first. The Saver, on the other hand, puts 10 percent towards a tithe (we pay that 10 percent first in our house, right off the top) and 10 percent into his savings.
Exhibit C: The Spender goes through all of his bills before paying himself. There’s very little, if anything, for someone to save if they wait until their money has run out. Saving for the future is a priority for the Saver, so he uses the money left over after paying “tithe” and “self” to budget his spending.
Hopefully that makes sense. In photos, the idea of priorities or ranking of when to pay something doesn’t really come across as clearly as when done in person.
It should be said that the Spender does well in making bill repayment a priority and it does seem illogical to put money in the bank when money is due. Yet, it’s a short sighted view of handling finances. The Spender’s habits are setting himself up for a life of living paycheck to paycheck and likely living outside of his means. The Saver sees the problem of the paycheck to paycheck cycle and works toward a goal of financial freedom where money isn’t a factor in my life and in making decisions.
Did your dad give you a financial education? What advice did he offer you?
