Dear KJ
Today is Father’s Day and I wanted to share my thoughts with you as a Father about your personal finances. I know right now a big financial decision for you is how to spend your meager allowance and how to make your birthday money go as far as possible. One day you’ll be making more complicated money decisions. That’s what seems to happen as you get older – the money decisions are more complicated. So here are my top 8 money tips to you.
1. Have life goals and make smart money decisions to help you reach them. Another financial person I know said, “Your money is an extension of you and you get to use it as you want. Use your money with purpose; don’t let it just evaporate into the unknown.”
2. Know the difference between “needs” and “wants.” We’ve talked a little about this already and please don’t forget it as you get older. A “need” is food, shelter and clothing. Almost everything else is a “want” and can be delayed.
3. Save early and often. Your Mom and I have started you on this path already by asking you to save 10% of your allowance and birthday money. Keep doing this and when you need cash some day for one of your life goals, it will be there.
4. Know how much you spend every month. Right now, you spend money on video games, movies, special school supplies and other fun stuff. Later in life you’ll spend money on gas, food and clothes. As I suggested in #1 above, no matter how much or how little you spend, use your money with purpose.
5. Invest wisely. You’ll hear about the miracle of compound interest one day soon and it’s the single most important investment idea I can share with you. Each dollar you save earns some interest and then that bigger amount earns more interest without you having to do anything. This is the reason we have you put your savings into the local bank where it can earn interest instead of keeping in your piggy bank. Combine this idea with #3 (save early and often) and you’re on your way to being a true financial genius.
6. Borrow rarely. Soon, very soon, you’ll be tempted to get a credit card. The promise of a credit card seems too good to be true. Buy something now and pay for it later. But as you know even at your age, if something seems too good to be true, it probably is.
7. Be prepared. Remember when our family dog died after a long and wonderful life? We were all sad and your Mom and I tried to help you understand that stuff happens in life and we need to be prepared. The same rule applies when it comes to your financial stuff. When you own a car, house or have a job, you never know if something unexpected will happen so be prepared for it.
8. Be generous. You are blessed to grow up with two parents who love you, you have a roof over your head and enough food to eat and warm clothes to wear. Not everyone is as lucky as you so be generous with others. Give away some of what you have to others who need it more and you’ll make the world a better place and you’ll feel better too.
So KJ, this my Father’s Day gift to you. I hope this helps you as you pick you way along your life’s path. I hope you’re fortunate enough to be a father some day too. Thanks for being a great son.
Love,
Dad