October 8th, 2012
Financial Lessons I Learned from My Parents
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When I first signed up for Credit Karma, I must admit that I was extremely nervous to finish registration and find out my credit score. I knew it wouldn’t be terrible- I had always paid off my credit card in a timely manner, but I didn’t think that would translate to an awesome credit score.
Much to my surprise, I was wrong! As an early 20-something-year old, I had an “excellent” score of over 750- a score that was better than 99.8% of my age percentile.
After doing some reflecting, I’ve come to the conclusion that I wouldn’t have a great score if it weren’t for the financial lessons and habits my parents instilled in me my entire life. I learned not only by listening to what my parents said, but also by watching and copying their own financial journeys.
It turns out having a great credit score by your early 20’s is not only doable, but also easy. Here are a few lessons I learned, courtesy of the best parents an early 20-something-year-old could have.
Lesson 1: Work Hard… Then Play Hard!
My siblings and I learned at an early age that money does not grow on trees- it needs to be earned. To enforce this point, instead of giving us free pocket money every month, my parents paid us to do tasks around the house. If we didn’t get the job done, or didn’t do a satisfactory job, we simply wouldn’t get our allowance.
As a kid, I probably thought this was stingy and unfair. However, I am grateful that my parents taught me the value of hard work. Inspired by their industriousness, I found a part-time job to earn some money during the majority of high school and college, worked or interned every summer, and now have a full-time job. Barring any major emergencies, I feel confident that I have saved enough money for both my wants and needs- which is apparently no small feat!
Another value I learned from my parents was to let loose once in a while. A person can go crazy working their entire life without pausing to have some fun with the money they’ve earned. For this reason, whenever my dad takes us on vacation, he actually encourages us to spend. Vacation is the one time he does not worry about money, and I’m grateful for that, too.
Lesson 2: Save as Much as You Can… But Don’t Be Stingy!
Working hard and earning a lot of money does not necessarily equal a great credit score. The other piece of the equation is saving your money- spending less than you earn.
Growing up, although I never went with my parents to buy our new cars, I knew that they always had enough to pay for them in one large lump-sum. Because neither of my parents came from particularly wealthy families, I knew that they were able to do this for one reason alone: they had been saving money their entire lives.
My parents always encouraged us kids to save, save, save. Although we were tempted to blow what little money we had on toys and candy, my parents were sneaky – they offered to match whatever amounts we’d put into our retirement fund – effectively doubling our money!
Because of their example, most of the money that I’ve ever earned has gone into my checking account or retirement fund. I’ve never maxed out my credit card, was never unable to fully pay my bills, and have always had enough money to buy whatever I’ve wanted or needed.
Despite my parents’ tendency to save, they are far from stingy. In fact, they are actually some of the most generous people I know. Armed with compassionate hearts and the money that they’ve saved, they are quick to spend money buying gifts for the ones that they love and helping out those in need.
Lesson 3: Get a Credit Card Early… and Use it Wisely!
As the average age of open credit lines is an important part of calculating one’s credit score, my dad knew what he was doing when he got me my first credit card in high school. At just over 5 years, the length of my credit history is still not the best. However, it would be a lot worse if I waited until college (or after college) to apply for one. Because I received my first credit card at a relatively young age, all I need to do it keep this card open and in good standing and my grade will only continue to improve.
This lesson was the culmination of all the financial lessons I learned from my parents. Surprisingly, when my dad handed me my credit card he didn’t sit me down with a big speech about the need to use it wisely. He trusted that he had taught me well and that his financial lessons would stick… and he was right.
My parents work harder than anyone I know. Growing up, my dad would work long hours, come home to help us kids on our homework, and spend the rest of the night paying bills. My mom not only cooked, cleaned, and took care of her three kids, but also worked as a full-time English teacher whose comments on students’ essays were often longer than the original essay. I am eternally grateful that I can look up to them and model my life after their good examples in financial responsibility and life in general. They’re the best!
Cheers to my parents (and yours),
Jenna Lee helps manage the social media channels and blog at Credit Karma. Although her specialty lies in creating witty post-it notes, she also enjoys sharing all the financial information she’s learned since joining Credit Karma in February 2012. When she’s not working, you can probably find her trying out a new dessert recipe or learning/perfecting any musical instrument she can get her hands on. She may or may not have created a Twitter specifically to put in this byline. Say “hi” @leejennaa!