GREENSBORO, NC -- You've heard them say it, "Money doesn't grow on trees." Now as an adult, I bet you've said it too!
But what money advice did you learn from your parents and is it outdated or still holding true?
Certified Financial Planner Matt Logan asked his clients to share their parents' advice with him. The advice and Matt's thoughts on each one follow:
1- Never use a credit card.
I should have heeded this advice when I was in my college years as I learned the hard way how to deal with credit card debt. While using credit cards to run up debt is never a great idea, credit cards can be used to build your credit score. A higher credit score can help you when you are buying a home or a car, so I do like people to use credit cards. Heck, I use them all the time. Instead of the catch all advice of never using a credit card, I think this advice should be modified to always pay your credit card off every month.
2- You can have anything you want but not everything you want.
This one comes from me and the advice I got from my own father. I am not sure how true it is, but it does have places where it fits. I like to think of it as you can have the things that are most important, but you cannot have everything. I tend to repeat this to my own children even though it flies right over their heads.
3- Buy low sell high.
I loved this advice. Thanks so much for submitting it Sara. It sounds pretty simple, almost a no brainer, right? Let me ask you, did your gut tell you to move all of your funds to cash when the market takes a drop? Have you ever put in extra funds just because the market had been on a run? If so, you may have been selling low and buying high. My point is that you are not wired to buy low and sell high, it is not comfortable. This is great advice.
4- Never rent a home.
This advice came from Kim. Her parents really thought that renting was throwing money away. It is good advice to a point. If you plan on staying in the area or the house for a long time, I think that this is fantastic advice. In this situation why pay rent and not be building equity for yourself? If you have a fairly mobile lifestyle and have not settled into a long term career, I still like renting. It allows you the freedom to move as needed and the ability to adjust without having a house that will not sell tying you to a certain job or location.
5- Don't spend money you don't have.
This came in from Chris who is a banker. The irony here is palpable. His parents told him a great piece of advice though. If you only spend money that you have and never have to borrow you can avoid interest altogether. It is a safe way of living and may err on the side of being a little too conservative. I still like people to borrow money for their mortgage. I do not like to see people who spend more than their income on a regular monthly basis.
6- Pay yourself first.
Do you save money at all? This submission from Erin is a popular one. Many people run through all of their bills every month first thing. You pay your mortgage, electric, cable and phone bills but do you pay yourself anything and save? This advice of making yourself a priority and saving with every paycheck is great advice for everyone.
7- Don't put all your eggs in one basket.
I liked this one. It is a financial planner's mantra as I am constantly helping people diversify their funds among multiple investments as a way to lower risk. Great advice and worth following in my opinion. Thanks for submitting this John.
8- Save ten percent and tithe ten percent.
I have heard this advice through a few families and felt it was worth mentioning. This habit of living off of 80% of your income, giving 10% and saving 10% is a great model. If you started doing this as you start earning money and stick with the plan for the long haul, you would have amassed quite a bit of funds.
If you have advice that came from your parents Matt would love to hear it!
You can also go to my website www.mattloganinc.com for more information on financial topics you may find helpful.
Matt Logan is a Representative with Matt Logan Inc and Summit Brokerage and may be reached at www.mattloganinc.com, 336-808-0126 or firstname.lastname@example.org.
Matt Logan Inc is an independent firm with Securities offered through Summit Brokerage Services, Inc., Member FIRNA, SIPC. Advisory services offered through Summit Financial Group Inc., a Registered Investment Advisor. Summit Brokerage Services, Inc., its affiliates and Matt Logan Inc. do not give tax or legal advice. You should consult an experienced professional regarding the tax consequences of a specific transaction. These are the views of Matt Logan Inc, and not necessarily those of Summit Brokerage Services, Inc. and any of its affiliates and