Money Slackers: Our favorite financial lessons from mom & dad
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Welcome to Money Slackers, a regular discussion among Policygenius staffers about money. We held the following conversation in a Slack chatroom. It's been lightly edited.
Myles Ma : Hello to my favorite group of people with whom I regularly talk about money. In honor of Mother's Day, which is days away as of this chat, and Father's Day, which is a month away, we're talking about our parents!!! And how they've influenced how we think about money.
So let us get started. Anna, since you partially inspired this discussion, can you start us off with some of the best financial advice your parents gave you? Everyone else can chime in after.
Anna Swartz : OMG, wow, I'm honored to kick this off. My parents are amazing savers, in an intimidating way, and they know a lot about money so I go to them with my questions all the time, but I'd have to say the best advice I've gotten is from my mom, Linda.
Myles: Hi, Linda!
Anna: She's a big fan of spending more money up front so you get to enjoy it longer. Like she thinks when you buy a home, or any property, do as much as you can afford to do upfront so you get to enjoy it longer, as opposed to like, renovating the kitchen right before you sell. You can't take it with you, so at a certain point you have to be willing to spend some money to improve your quality of life!
Myles: I think my parents have become like that, but when I was growing up, were much more tightfisted.
Holden Lee : My parents are in general horrible with money.
Jeanine Skowronski : Say more, Holden.
Holden: Generally, they are frugal, but 1) they never talked about money with me, 2) they never shared any financial info with me, and 3) the only time I got any sense of their financial situation was when I applied for the Free Application for Federal Student Aid. The only financial advice I got was "Do what you love, money will follow."
Mohammed Diallo : My mom is like Holden's parents in that she gives little money advice and told me I could do what I love as long as it's doctor, engineer or lawyer. After all, they didn't send me to America to be broke!
Hanna Horvath : My parents said "Money is a privilege, not a right."
Anna: Did you get an allowance growing up?
Hanna: No I didn't. But I started working at 14. So I just used that money.
Myles: I got like $20 to buy lunch for the week and I got to keep whatever I did not spend. This encouraged me to eat a bagel every day. Bad incentive to be honest.
Anna: In high school?
Blayne Smith : We grew up pretty thrifty and I learned a lot from that, not really specific advice all the time but just realizing that in a relatively large working-class family (4 kids) we had to live within our means. And we were all pretty aware of that.
Holden: I recall that certain things were always OK to buy, e.g. books. or anything "educational." Otherwise, mostly no.
Jeanine: My parents were big on the ole "money doesn't grow on trees" adage. Also, "DON'T EVER MESS UP YOUR CREDIT SCORE." That was a big thing. Probably why I have such good credit.
Blayne: My dad co-signed a very low-limit credit card for me when I was 16, which helped me build up credit.
Patrick Hanzel : My dad opened a credit card for me when I was young to help build mine. My parents didn't seem to hide much from us. But then I became a financial adviser and my dad was never hesitant to show me anything I asked about.
Holden: I just know my relationship with my kids will be completely different than my parents were with me re: finance/money.
Hanna: How so, Holden?
Holden: Well, firstly, I think (hope?) I know more about financial stuff than my parents. Just the mechanics, you know? Secondly, I think I will have the luxury of providing an allowance so that my kids can "practice." Thirdly, I will try to incorporate money with day-to-day things like learning math or shopping. Math, behavioral economics, financial products and services... There will be in-depth discussions on this at the family dinner table. I can see it now.
Myles: For the parents/aspiring parents, is there anything you'll pass down about money that you learned from your parents? Or will you go a totally different way?
Jeanine: DON'T EVER MESS UP YOUR CREDIT SCORE. It's good advice.
Hanna: DEFINITELY to start investing ASAP.
Patrick: To follow on Hanna, time value of money is wild.
Myles: Anyone have any bad financial advice/ideas their parents gave them?
Patrick: My dad had some bad experiences with stock brokers where they tried to time the market. So I advise against ever doing that.
Myles: My dad enjoyed buying individual stocks when we were growing up, which as I now know isn't necessarily the best thing to do with your money.
Blayne: Student loans are "good debt." Which I think at the time was a reflection of it being an investment and maybe for a long time when college was cheaper, it was a worthwhile investment. But I don't think my mother understood just how difficult student loans could be. Anyway I wasn't buried by them but I think I would have gone a different route with different advice. My dad, on the other hand, thinks college is a scam. He might be right.
Myles: Does anyone still go to their parents for money advice? I feel like it's reversed a little for me. I have to nag my parents to, you know, HAVE A WILL.
Holden: Hell no. But that's probably expected from me.
Hanna: I go to my parents for money advice.
Anna: I do! I had to ask my parents what to do when I turned my old 401(k) into a Roth individual retirement account.
Myles: Did they give you good advice?
Anna: I didn't realize you couldn't turn it back into a 401(k). They told me to talk to a financial planner instead of using an app, which was good advice.
Jeanine: I go to my dad for financial advice all the time. Just this past weekend, I asked him if I should refinance to a shorter-term mortgage.
Patrick: No, not anymore since I have a good grasp of overall financial planning, but in the early stages I definitely relied on my dad for advice. For something like a mortgage which I've never had though I'd likely discuss with him since he's much more well-versed in that area.
Holden: One thing to note, though... info on money matters was not as readily available as it is today. Remember internet in the '90s? So unless you lugged yourself to the library or knew someone in finance, it was really hard to know what's what. My parents were busy putting food on the table, not focusing on savings and maximizing annual returns on their assets.
Myles: That's a good point. Our parents (especially mine because they were immigrants) did not have as much know-how available to them as I did growing up. Whereas I could Google any questions I had.
Holden: That's good context too.
Patrick: Now we have Jim Cramer...
Jeanine: And Suze Orman.
Blayne: My dad gave me a Dave Ramsey book with a bunch of $20 bills between random pages when I went to college. I took all the twenties and never read the book.
Blayne: I think I still have it though.
Myles: My parents slipped an article by Ben Stein on the value of hard work into my backpack when I went to college. Which I guess is financial advice.
Anna: I don't know if this is financial advice but my parents also told me to say nothing except "I want a lawyer" if I ever got arrested. That's also good advice.
Jeanine: Has anyone ever given their parents bad financial advice?
Hanna: OMG my sister tried to convince my dad to invest in bitcoin.
Myles: Was he interested?
Hanna: He actually knew what bitcoin was so no. This is the sister who also bought individual weed stocks.
Patrick: That's actually probably more promising than bitcoin.
Jeanine: I talked my dad out of buying Facebook stock. Good or bad?
Myles: Oof. When?
Jeanine: During the initial public offering.
Mohammed: I explained the concept of startups to my mom and she told me it was a terrible idea. (“What if the company doesn't raise the money it needs?” she asked. Touche.)
Myles: Is there anything about the way you handle money that you can tell comes from your parents? I have definitely inherited my dad's cheap streak.
Hanna: I def got a cheap streak from my dad.
Anna: I got an obsession with real estate from my mom. I'm itching to buy a cheap house somewhere weird. And my wife isn't onboard.
Jeanine: I'm extremely debt-averse and I definitely got that from my dad.
Holden: Unfortunately, only bad habits that have taken a business school education to undo.
Myles: What is a bad habit you had to undo?
Holden: Not talking about money. Saving and not looking at the savings and figuring out how to maximize returns on these savings.
Patrick: I look for good deals, which I definitely got from my mom. She still uses coupons to save like 25 cents on yogurt.
Myles: I wish I inherited that from my mom. She is a deal/haggling master and I'm too lazy and non-confrontational. When is the last time you talked to your folks about money? Did anything fruitful come out of it?
Jeanine: I decided not to refinance my mortgage.
Patrick: My dad still works with an adviser that I worked with back in Nebraska and he always comes to me regarding any changes they are going to make.
Myles: Are you jealous that your dad doesn't just come to you first? Does he know you're a certified financial planner?
Blayne: I would be jealous of the fees the other guy is making on your advice.
Patrick: Well, at Policygenius I don't have access to the necessary products for those types of things like annuities, etc. The adviser and I are still close so he asks me for my permission beforehand, too. He's a good guy so I know he wouldn't steer him wrong.
Holden: The other thing to note is that when you're not making much and living frugally, there's not really much to discuss. I'm not saying my parents lived paycheck to paycheck, but the discretionary income isn't what the professional middle class enjoys today.
Anna: Something that I think makes it a little hard is that my parents and I live in such different worlds. My dad worked as a public school teacher for 30 years and retired at full pension. 2019 is just a different landscape. And I can't imagine having the same job for three decades — except Pg obviously.
Blayne: On Holden's point, I don't think we quite lived paycheck to paycheck, but I do remember my dad spending hours and hours balancing a checkbook with bills on his desk and I don't really have to do that, probably because a lot more is online. And I don't have four kids on a single income. But I do have two kids in New York City.
Jeanine: My dad had legal pads that he would do all his financial planning on. Whenever those were out, I just stayed away. I definitely felt his stress about money. He had a good job — and now has a great pension — but I'm pretty sure my dad couldn't relax until my brother and I were working and he could retire comfortably.
Holden: Balancing the checkbook was financial planning and management for my parents as well... because they didn't have apps back in the day. "Winning" was not bouncing checks.
Blayne: I remember learning to balance a checkbook in high school.
Anna: I'm not even sure what balancing a checkbook means.
Blayne: And then doing it once when I got a checking account and asking myself "Why am I doing this? I can see the balance online."
Myles: Since we are nearly out of time, let's end with some gratitude in light of Mother's/Father's Day. What's one thing you're thankful your parents imparted in terms of finances?
Mohammed: The best money advice I got was from my dad — when I asked him to buy me a new pair of sneakers, I was about 11. He sat me down, and we went through an exercise where he showed me how much he made and made me subtract all of his monthly expenses. After that I told him, you know what? I'll be fine without those sneakers and also, how are you doing this?
Hanna: I said this before, but to invest. I put money into an index fund when I was 18 and I am SO HAPPY I did.
Patrick: My dad did tell me the best piece of advice he utilized is to push his Social Security to the max age if he didn't need the income. And he'll be turning 70 this year.
Jeanine: I'm grateful for feeling my dad's money stress. It was the reason I didn't graduate with a ton of student debt or take out an exorbitant car loan, among other things.
Anna: Invest in real estate is my parents' most lasting lesson except I haven't done it yet. Maybe our next topic can be homeownership??
Myles: For me, I think it's a cliche, but it's hard work. My parents still work really hard and save a lot of their money and it's a good example to live up to.
Holden: I'm thankful my parents did what they needed to do to make ends meet and send me to college.
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