Yes Dad, I was listening.
With Father’s Day coming up (June 19th) I keep thinking about all the advice my Dad has given me over the years. Some of my strongest beliefs about money come from what he tried to teach me, so in tribute to Fathers everywhere, here are some of the most valuable pieces of advice I ever received about saving money and growing rich.
- Always save a minimum of 10% of your income.
It doesn’t matter how much you currently earn, you can probably live just as well on 90% of your income as 100% of it. Do NOT touch that 10% for at least a year. Knowing that you have money in the bank will enable you to breathe a little easier, knowing that you are covered in case an emergency happens.
- Take control of your spending.
Not everything you spend money on is a necessity. My father told me “Everybody will tell you that they don’t make enough money, but not everybody makes the same amount. Your ‘necessary’ expenses will grow as your income does unless you take control of your finances. Don’t confuse what you want with what you need.”
- Find a place to invest your money.
Don’t take your money and hide it somewhere. Each dollar has the potential to work for you as you work for someone else. Make sure each dollar earns interest. Make your money work for you.
- Consider each investment carefully.
“Large risks may bring large rewards”, he tells me, “but no risk is worth it if you cannot stand the loss.” For example, your auto mechanic friend may tell you that he knows a guy who is going on a business trip to Africa to buy precious gems and jewelry. He will then return to sell them here at great profit and you can get in on it for only $1,000. Ask yourself, what does my friend, or his friend, know about gems and jewelry? And how do I know that I’ll get my money back if it doesn’t work out?
- Own your home.
If you pay rent to a landlord all your life, you will have nothing to show for it at the end of your life. If you pay a mortgage instead, then you will not only own the roof over your own head, but there are several tax deductions owning a home can bring.
- Invest in a retirement plan and life insurance.
Make sure that in your retirement years you will have an income which you can live on and, in case tragedy happens and you are no longer around to support your family, make sure they are taken care of by purchasing life insurance.
- Increase your ability to earn.
Even if you don’t have the time or can’t afford to go to school, find a way to increase your knowledge and skills to make yourself more marketable. Become a life-long student and be curious about everything, but most importantly guide your learning. Create a concrete goal and make yourself more valuable to those who might hire (pay) you.