Financial Wisdom for Father’s Day

When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years.

~ Mark Twain

Update: This article was included in the Carnival of Personal Finance #262 posted at Personal Finance Journey. Thanks!

The financial habits of society at large over the past few decades have been, in some ways, reflective of the attitude of the 14-year-old in the opening quote. In an article entitled How Did We Get Here? I pondered the progression of social and financial values from the 1950s to the present era. I speculated that the Baby Boomers’ rejection of their parents’ social mores gave birth to some great new ideas, but that we may have allowed the pendulum to swing a little too far in the other direction as a result.

The hippies of the 1960s railed against many of the social, political and financial conventions of their teenage years, calling for massive change and a new way of doing just about everything. Perhaps it was the sheer size of the cohort that allowed the Boomers to actually implement many of these changes, or maybe we were all just ready for something new.

Either way, the Boomer revolutions and evolutions have spawned some positive changes. Does anyone regret the move toward racial and gender equality? Still, it’s been my contention that, in our quest for renewal, we may have inadvertently thrown out some necessary, foundational ideas long with those truly in need of an overhaul. As such, I thought Father’s Day might be a good time for us to remind ourselves of some of those foundational ideas.

Financial Wisdom from Warren

Warren Buffet will turn 80 in August. I think he definitely has the requisite experience and performance record to be considered a father figure on all matters pertaining to money. Now I’m not one of those Buffet worshippers, but I really like many of his homespun truisms. I found a nice listing of some of them on Trading and Wisdom Quotes. Here are a few fatherly pearls from the Oracle of Omaha:

Spending: If you buy things you don’t need, you’ll soon sell things you need.

Saving: Don’t save what is left after spending; spend what is left after saving.

Hard Work: All hard work brings profit; but mere talk leads only to poverty.

Laziness: A sleeping lobster is carried away by the water current.

Earnings: Never depend on a single source of income.

Borrowing: The borrower becomes the lender’s slave.

Accounting: It’s no use carrying an umbrella if your shoes are leaking.

Auditing: Beware of small expenses; a small leak can sink a large ship

Risk- Taking: Never test the depth of the river with both feet.

Investment: Don’t put all your eggs in one basket.

Like many pieces of fatherly advice, these aphorisms are so elegant in their simplicity, and so painfully obvious once uttered or employed that we often wonder why we didn’t appreciate them before. And yet they elude us. We can hear these truths, understand that they make sense, and not follow through on them. I know that I’m guilty of intermittently neglecting at least 4 out of the 10.

Consider the Source

A lot of times the best advice that our fathers have to give is the advice we least want to hear. Who wants to save up enough money to pay cash for a modest car? Who wants to forgo the latest gadget now in order save for education in the future? The truth is, the best fatherly advice can be the hardest to follow.

But we must always consider the source. Our Dads usually offer us their ideas for two main reasons:

1. They don’t want us to experience the pain of making mistakes.
2. They love us.

So the next time your Dad offers you some advice, whether it was solicited or not, just consider the source and remember this English proverb:

“Write down the advice of him who loves you, though you like it not at present.”

Happy Father’s Day to all the Dads out there!