Financial Advice & Family

The subject of family can apply to various aspects of financial planning. And although sensitive, there could be an entire TGIF 2 Minutes series on family and personal finance. On a positive note, and more specifically for this week’s edition: I hear often from financially comfortable – and confident – clients and friends about basic, treasured personal financial advice they received from a family member – most going back 20, 30, even 40 or more years ago!

Mixing family and money can get sensitive quickly. But over years of observing, there have been far more positives than negatives for those who were willing to step back, look at the bigger picture and accept solid, basic advice. Humility was involved. Patience is necessary. These are not my opinions but rather real pieces of feedback from people who are grateful they took certain, basic advice from a wise family member at some point earlier in life.

Financial advice from a wise Mom, Dad, Grandma, “Uncle Pete” or “Aunt Claire” can make a lifetime of difference.

Family members can be:

  • a Parent (most obvious)
  • Grandparent
  • Aunt or Uncle
  • Godparent
  • Cousin
  • Sister or Brother
  • Long-time Mentor, even Boss

or simply a person who cares honestly and deeply about another person.

Types of advice can be wide-ranging but tend to fall into categories. Especially in the past several years of financial pain and challenge, those of all ages who took certain advice long ago have survived and even thrived. Here are a handful of my favorites – and they probably won’t surprise you:

On saving & spending

  • Live within your means
  • Avoid debt at all costs (except a home mortgage)
  • If in debt, figure a way out – it is hardly ever too late to start over
  • Pay yourself first, in the form of automatic savings in more than one form
  • Always have an emergency fund

On retirement saving

  • Contribute to your company’s retirement plan (or an IRA) and try to max out at as young an age as possible

On buying a home

  • When buying a home, make a down payment of at least 20%

On investing

  • When buying “hot stocks”*, always be prepared to lose an investment and be able to remove emotions

In general

  • Sacrifice a couple of the nicer things earlier in life in order to afford and enjoy them later

On seeking advice

  • Don’t be afraid to ask for advice – find someone trustworthy to consult.

Basic, yes? Advice on the more complicated aspects of saving, spending, emergency events, investing and taxes can be gained from a professional at an appropriate time. In the meantime, taking advice from a wise Mom, Dad, Grandma, “Uncle Pete” or “Aunt Claire” can make a lifetime of difference.

*The term “hot stocks” can now refer to new technologies, private equity, cryptocurrencies, and other illiquid investments.

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