Good Financial Lessons for Father's Day
Fathers can set a good financial example with six tips, suggests Bills.com CEO
SAN MATEO, Calif., June 13, 2007 - With Father's Day coming up on June 17, most people are spending money to treat Dad -- and Bills.com co-CEO Brad Stroh suggests Dad return the favor by giving kids the gift of financial well-being. "Whether you focus on your own finances or teaching kids the basics, a solid financial future is one of the best legacies a parent can leave a child," said Stroh, co-founder of Bills.com, a free online consumer portal. Care for Yourself First Stroh compared financial planning to airline safety rules. "On a plane, we learn to put on our own oxygen mask before attempting to help our children. When it comes to money, securing your own future will take a weight off of your children, too." Stroh suggests these three steps to kick off a money-smart summer:
- Pay off debt. "Debt cripples any hopes of financial freedom," Stroh said. "Demonstrate character and responsibility -- those most fatherly of traits -- by paying off debt." First, make monthly payments on all secured debts (mortgage, car). Use remaining available funds to make minimum payments on all credit card debts except the one with the highest interest rate. On that one, pay as much as possible for the month. Keep doing this each month until the debt with the highest interest rate is paid off. Then pay as much as possible on the account with the next-highest interest rate. Continue with this strategy until all credit card debt is paid off.
- Model responsible choices. "If you argue with your spouse about money or spend like it's going out of style, think about what your choices teach your children," Stroh said. He suggested that, even if only for one day a week or one week a month, fathers can try drinking water instead of buying a large latte, cooking in instead of dining out, or playing catch instead of splurging on a day out. "In the process, you might find a chance to talk with your kids, too -- building relationships while building financial well-being."
- Take care of yourself. No matter how old their children are, parents should have safeguards in place. Those with young children should have health and life insurance coverage and a plan for children's guardianship in the unlikely event both parents would die. Mature parents of grown children should look into long-term care insurance. Everyone should have a will, a living will and a medical power of attorney.
Leaving a Financial Legacy
Teaching kids to handle their money is a great gift for their futures. Stroh offered three ideas:
- Fund education early. Those with the resources to save for their children's education should start saving as early as possible to harness the power of compound interest. Because they allow tax-free contributions and tax-free withdrawals for education, 529 accounts can be great ways to save. But do some homework first. Be sure the fees charged on the account won't cancel out earnings. Learn whether out-of-state friends and family can contribute to the account. Understand all the options for Junior’s use of the funds. And if your family is low-income (and thus likely to receive large amounts of financial aid), research whether savings would cancel out financial aid awards.
- Teach financial responsibility. Parents should teach money management, not serve as a free ATM for the youngsters, Stroh said. Give them a way to earn money (whether via a job, household chores, or other system that works for your family). Provide an allowance -- a "budget" -- for spending on vacation. Help them allocate their money to spending, long- and short-term savings, and charitable contributions. Children age 6 and up are old enough to learn how to handle money.
- Set a good example. Talk with teens about financial decisions. Don't worry them about whether you can pay the bills, but they need to know money doesn't just flow freely. "Even adults have to choose whether to take a week's vacation or buy a plasma television -- or forego both to pay the orthodontist," Stroh said. "Talking through those choices will give kids a clearer picture for their future."
"Once fathers have taken these steps, they can rest easier, knowing they are paving the way for their children to create their own financial security," Stroh said. "And that's really a gift that keeps on giving." Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. The company blogs about consumer finance issues at http://www.bills.com/. Since 2002, Bills.com and its partner company, Freedom Financial Network, have served more than 15,000 customers nationwide while managing more than $350 million in consumer debt. The company's co-founders and CEOs, Andrew Housser and Brad Stroh, were named Northern California finalists in Ernst & Young's 2006 Entrepreneur of the Year Awards.