Tommy Jr. has his dad’s home run swing and your love of gardening. Lorelei got your love of baking, but also your less-than-ideal kitchen cleanup tendencies.
On their road to becoming full-fledged individuals, kids start off by taking parts of you. It shows in the things you pass down, whether you mean to or not. Hopefully, all your kids will get your savvy saving habits. Money: You can’t be an adult without it.
Families pass down financial habits, just like football Sundays and rib recipes. If you ask parents what they most wish to bequeath to their children, a responsible attitude about money is usually at the top of the list.
But all families are different, so those “inherent inheritances” take different forms. Some of the most common:
Aim for the 80/20 split.
Live on 80 percent of what you make and save the remaining 20 percent. A less specific form of this philosophy goes by the title “Spend Less Than You Earn.” As long as you follow this philosophy, major financial disasters can be avoided.
Credit card debt is poison.
Don’t put more on cards than you can pay off every month, or you’re letting Borgia-strength financial toxins into your life. Think of interest payments as flushing fistfuls of cash down the toilet. Until it clogs, and you have to pay the plumber with a credit card, too.
Keep an ace in the hole.
The people hit hardest by recessions or job losses are those who were already living paycheck to paycheck. Those who keep six months’ worth of bill-paying emergency funds stashed away in a savings account sleep better at night, even if they never have to use it.
It’s not about stuff.
Life is about experiences, not the pursuit of material goods. If you’ve got good friends and a blanket in the sun, you’re richer than everyone standing in line for the latest gaming console or smartphone.
Except when it’s about stuff.
If there’s something you really want, it will be there tomorrow. Sleep on it. Sometimes, 24 hours of perspective takes the shine off impulse purchases. If you still want something after saving the money for it, go ahead. Just try not to assume debt for luxuries.
Have a plan for any and all stuff.
When it’s time to make a big purchase – or even a weekly grocery store trip – don’t put yourself in danger of making impulsive decisions. Research cars thoroughly before wandering through a lot filled with temptation. Try on leather jackets at several different stores. Above all, make lists.
Don’t pass up free money.
There’s no such thing as a free lunch, but employer matching funds to retirement savings come pretty close. As soon as you get a full-time job that allows you to contribute to a 401(k), put in enough to maximize your company’s matching funds. Even if it hurts. It’s like picking up $100 bills on the sidewalk that never belonged to anyone.
Productivity is its own reward.
Happy people attack their jobs with gusto. Even the superrich keep themselves busy with creative pursuits or charity work. The more you think of your job as a chance to be rewarded for true accomplishments, the more successful your career will be.
If these sound similar to adult-focused money-management tips you’ve heard, that’s no coincidence. After all, kiddos absorb most of their values through example. That’s why your admonitions about eating healthy ring hollow if you’re clumsily stashing Oreos all over the house.
Want to pass on good habits? Just make sure you’re following your own advice.