4 Things My Dad Taught Us About Personal Finance June 17, 2021
Fathers often play a different role from mothers in parenting and raising their children.
In Asia, fathers are traditionally the heads and main breadwinners of the family.
Mothers are tasked with domestic matters, though these days, many are successful career women in their own right, excelling both in and out of home.
Every father figure is different. Mine is a man of few words but firm. While the children’s education was the purview of my mother, my father would step in to discipline any of us when necessary.
My father also imparted to us from young some important financial concepts and precepts. These have served my siblings and I well, as we become parents ourselves. They continue to influence our financial decision-making till this day.
Lesson 1: Choose practicality over gratification
One of the lessons my father taught us – that is forever etched in my mind – was what to consider when buying a car.
Though brand-new cars are ideal, buying one might not be the best financial decision.
New cars would require larger upfront payment as well as taking up a larger loan quantum, which may rank as one of your bigger monthly liabilities after a mortgage for a property.
Second-hand cars might not be spanking new but can achieve the same goal of bringing you from Point A to Point B. They are generally more affordable and economical for those whose jobs require a car to zip around town, such as sales professionals, housing agents or insurance agents. They are just as good at ferrying elderly parents and young kids around.
A word of caution, though. Buying a second-hand car does require some knowledge of the condition of the used car. Not all of us can spot faulty parts or prior damage in a car. As such, it is best to call on the services of a reputable car dealer when selecting your car.
The same practicality in buying a car can be extended to other financial decisions. Basically, what Dad was teaching us was, what is desirable may not be the most economical or sensible. One should always hold back one’s instinct for brand-new things and decide on the basis of practicality.
Beyond cars, the advice can be applied to decisions such as buying a condominium, where to go for a honeymoon – Europe or more cost-effective Malaysia – and even a simple meal at a hawker centre versus a fine-dining experience in a 2-star Michelin restaurant.
Lesson 2: Spend on the things that are worth it
We also learnt from our father how one should spend money, simply by observing his habits. While my father is frugal – he gave his entire salary to my mother for housekeeping purposes and moonlighted to earn his keep, he did not pinch pennies when he saw the need to spend.
For instance, being a great believer of family bonding, he would not hesitate to bring us out for a meal to spend time together once in a while. Every public holiday would be spent visiting places like the Singapore Zoo or Jurong Bird Park. It would end with a simple but thoroughly enjoyable, satisfying meal at a good hawker centre or a modest air-conditioned restaurant if the weather was hot.
Lesson 3: Never stop learning
While working in a sales team for an engineering parts company, he also worked part-time on weekends, as a taxi driver, he upskilled himself by learning computer skills and designing presentation slides to explain the technical jargon used at work to present to clients and colleagues. These efforts caught the attention of his management in the full-time job, who chose him to visit its various satellite offices to share his knowledge with the other colleagues.
My father eventually gave up his part-time job due to age and health concerns but not before he had actualised himself with the additional knowledge and skills and earned the recognition of his company.
Lesson 4: Grow your income to attain financial freedom
Though he might not have been a great investor, my father showed us that working hard to increase income is important, in our journey towards financial freedom. While investing can speed up the growth of funds, increasing our base income and setting aside funds for the future are equally critical.
After all, one can still achieve one’s financial targets by setting aside S$1,000 every month in a savings account. This can be done more easily than investing S$100 a month at a rate of return of 10%. Building a pool of emergency funds earlier would also allow one to invest with greater peace of mind, knowing you would not be forced to liquidate your investments in a short time in a contingency.
What my father did not teach us but I will also teach my kids: Start investing early
My father did not share his investment knowledge with us because he had only tried investing once, through his Central Provident Fund account. That experience left him unfazed, as it did not yield good results.
In my parents’ time, investing was rocket science. Many might not have heard of investing, let alone dabbled in it. Investment was also generally perceived to require large sums of money and risky.
I believe that teaching my kids the importance and fundamentals of investing early is crucial, as it is part of holistic personal financial planning. While cultivating a habit of saving is important, it is equally essential to look beyond parking funds in piggy banks or bank accounts to grow wealth.
I will introduce to them the concept of investing by showing them how to cultivate a plant. Watering plants daily is akin to the idea of setting aside savings consistently. Otherwise, the plant would not grow healthily. The children would then be taught how to choose different types of seeds, which would yield different plants. These would provide an analogy to the various investment options in the world of investing.
Together with the four lessons from my dad, I hope that my children would grow up to have good financial habits and the ability to manage their finances wisely.
To my Dad, I thank you for the headstart you gave me and all the contributions and sacrifices you made for the family!
Wishing all the fathers out there a blessed Father’s Day!
About the author
Teo Huan Zi
Branch Manager, Phillip Investor Centres
Teo Huan Zi graduated from Nanyang Technological University (NTU) in 2014 with a bachelor’s degree in Business, majoring in Banking and Finance. Having been with Phillip Securities since 2015, he currently manages a portfolio of over 10,000 trading accounts as a Branch Manager. Prior to his current role, Huan Zi was also a senior equity specialist and senior investment specialist in the company. He also frequently conducts seminars and webinars to empower his clients with financial and investment knowledge such as fundamental analysis and technical analysis.
He regularly contributes and features in different media platforms such as 958 radio and provides market commentary for various newspaper like LianHeZaoBao (联合早报), The Edge, and Business Times.