One of the greatest responsibilities we have is to leave a legacy with the next generation. If we don't pass on the best of our values and the lessons we have learned to the next generation, then we aren't setting them up for success in the future.
I'm lucky to have a dad who passed down a great legacy to me. Recently, I reflected back on that legacy, and in doing so, I realized just how vital his lessons were to my financial well-being. They're lessons that I believe every father should teach his own kids. And here they are.
1. Put it in the bank
They say that values aren't taught but caught. While that probably is true, I do believe that values must first be taught before they can be caught.
One of the foundational financial values my dad taught me was to put a portion of the money I received, whether from birthdays or allowances, in the bank. That was the beginning of what I've come to know as an emergency fund.
This was a value that really caught hold later in my life by watching my dad. He always had a portion of each of his paychecks going into a savings account in case of an emergency. What really drove home the importance of my dad's habit of savings was that I never saw him worry when the furnace stopped working in the dead of winter at the same time the car broke down. That's because he didn't have to worry about how he was going to pay to fix these problems, because the money was already there, saving him from putting it on his credit card and paying boatloads of interest.
I'm really glad I caught this lesson. It has come in handy more times that I can count.
2. Be careful with debt
My dad always treated debt with care and he taught me to do the same. He didn't avoid debt, but he would use it in such a way that it couldn't cause financial hardship down the road. There were two practical lessons he taught me in both word and in deed. First, when making a large purchase, such as buying a house or a car, he often put down a large down payment. Doing so not only prevented overextension by limiting the amount borrowed, but it also kept the subsequent monthly payments lower.
The other thing my dad taught me was to pay more than the minimum due whenever practical. Credit cards, for example, should be paid off in full each month if possible. Meanwhile, he also would pay a little extra on his mortgage because it not only built equity faster, but it also meant the house would be paid off faster.
The lesson that debt should be handled with care has helped me become much more financially secure than I probably otherwise would have. Thanks to my dad, I'm on pace to knock off an extra year from my mortgage simply by rounding up my payment and sending in a little less than $20 extra each month.
3. Give to those less fortunate
My dad has always been a very generous person, giving to his church, to soup kitchens, and to both family and total strangers. He encouraged me to be generous, and it's so evident in his life that it would have been hard to miss.
For my dad, generosity does two things. First, it forces him to live below his means, which is a key to financial security. The other thing giving to others does is it lessens the hold money has on his life. In a sense, by giving, it helps to better prioritize what's most important in life, which are the people around us and not the things that money could buy.
Of the financial legacies my dad has passed down to me, I think this lesson has had the most profound impact on my life. Living below my means has lightened my worries, and giving to others it has lessened my want for stuff. It's also been quite rewarding to be able to give to others in their time of need, even if more often than not they didn't know the gift was from me, nor did I even get to see their reaction.
Leave your own legacy
My dad taught me a lot of very important lessons, leaving a very rich legacy for me and those I come in contact with. That's because his actions spoke such volumes that these are lessons that I will never forget, and I've taken them to heart by following in his footsteps. And while these financial life lessons might not have made me rich, just like they never made my dad a rich man, I have still joined him in living a very rich life.
My challenge to you is to consider living out these same financial legacies in your own life so that you too can pass them down to the next generation.
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