Back in 2016, I wrote this post expecting I was going to have a daughter. Therefore, I started thinking about the various things I’d teach her growing up wrapped around personal finance.
I was nervous about how to be a first-time dad, especially to a daughter. I had one friend in her early-30s perpetually go in and out of terrible relationships. The last thing I wanted was for my future daughter to go through 15 years of breakups.
Instead of having a daughter, we had a son in 2017. Therefore, my thoughts were shelved until the end of 2019, when our daughter finally arrived. Hooray!
I’d like to revisit this topic and offer additional points. But first, a story.
A Friend Looking For Love
My friend sent me a picture of her date’s car: a newish $80,000 Porsche 911 convertible. She says she doesn’t care about what kind of car a guy drives, yet she admitted she was all giddy when he picked her up in his new ride.
Being the jerk that I am, I asked her, “How are you going to make out with him since he still lives at home?!” For those who don’t know, there is no functional backseat in a Porsche 911 convertible.
My friend shot eye daggers my way and waved me off.
Her date really doesn’t still live at home with his mom at age 35. I was just poking at her. But he does rent a dinky one-bedroom apartment in the suburbs of San Francisco.
His house-to-car ratio for fiscal responsibility is totally out of whack, signifying to me he is a poor financial choice for a mate.
This interesting circumstance made me think about things I’d teach my future daughter so she doesn’t make too many dating and other life mistakes.
Now that it’s four years after I wrote this post, I have the ability of hindsight to tell you the relationship didn’t work out. My friend ended up marrying someone else, a homely guy with a good resume. But she admits there is no spark.
Meanwhile, the guy with the Porsche actually decided to move back in with his mom. He’s still single, but at least he has a nice car.
Pay Attention To A Guy’s House Not His Car
I’m in father-to-a-daughter training mode because I know I’ll have a daughter if I ever have a kid. And you know me, I think long and hard about different scenarios way before they ever happen. Protecting my daughter from heartbreak is one of my main goals.
I want to help women around the world who are easily swayed by guys (or gals) with all show and no substance. A car is a perfect smokescreen. No matter how many times a woman says she doesn’t care about a nice car, she almost always does. Guys know this, so they take advantage.
I remember picking up a woman in my 2000 Land Rover Discovery II when he was still only five years old. Even though I bought him for only $8,000, a lot of people viewed Moose as a luxury vehicle costing close to $50,000.
After a couple glasses of wine, my date revealed to me that her neighbor friend texted her during our date saying, “How come guys in Land Rovers always gets the girl?” Apparently she was peeking out the window when I came to pick my friend up. Suffice it to say, I just landed on GO.
If you meet a guy with an expensive car who still lives at home or rents a modest place, warning lights should be flashing due to the incongruities. Start doing some research about his finances.
Questions To At Least Think About
* Did he pay cash for his car? Or is he leasing his vehicle? If he is leasing his vehicle, is he at least leasing it through a company he started?
* If he can afford a luxury automobile, why hasn’t he yet purchased his own home?
* What is his net worth composition? Does he own any assets that have the potential to appreciate?
* What is his debt load like?
* Does he have upside potential with his job?
* Does he have a trust fund or a generous Bank of Mom & Dad? If so, how does that affect the way he sees money.
* Does he read personal finance sites like Financial Samurai to help broaden his knowledge? Or is his favorite pass time playing video games?
* Has he come up with a retirement plan that makes sense? Or is he winging it?
Of course you can’t be so crude as to ask him all these questions directly. But over the course of many dates, you should be able to get a good sense of such things before being more serious. Life is much easier with a healthy financial partner.
Different Strokes For Different Folks
My friend was not pleased with my, “where are you going to make out comment,” so she defended her date by saying, “Different people have different values. He likes cars and he’s single, so why should he buy a place?“
My immediate thought was, “He can’t afford to buy a place because he just spent a fortune on a car!”
But I responded with a more cordial, “You’re right. Why should he buy real estate when he can have such a sweet ride. I myself am looking to buy a similar type of car once I turn 40.“
I know some of you who own nice cars and don’t own real estate may be a little agitated by this post. But here’s the thing. This post isn’t for you. It’s for all the people out there who are easily swayed by shiny expensive things.
For relationship harmony, follow this simple logic:
Be with someone who drives a nice car and also owns a nice house.
Be with someone who drives a regular car and owns his own place.
Be with someone who drives a regular car and rents a regular place.
Be with someone who takes public transportation and rents or owns a regular place.
Avoid someone who drives a nice car and rents a crap hole.
Of course, these conditions are based on the assumption that his debt load is manageable i.e. his asset-to-liability ratio is at least over 2. Owning a home he can’t comfortably afford can be much more damaging.
Why Focusing On His House Is Better
For those of you still unconvinced by my argument, let’s make my reasoning crystal clear! Here are four reasons why having a partner with a nice house is better than having a partner with a nice car.
In 10 years, a mass produced luxury car will lose 90% of its value, but a home will likely gain 22% in value if we assume a 2% long-term annual growth rate (rate of inflation).
Even if the person’s house gains no value over the 10 years, the homeowner will likely gain at least 12% more equity due to monthly principal pay down. More wealth = easier life.
A homeowner is more likely than a renter to stay put. How many times have you met someone you adored who ended up breaking up with you because he had to leave?
If you are going to spend your time and energy on someone, he better stick around long enough! Even if your potential mate only owns a one bedroom condo, at least you know he’s established roots in the community.
Someone who is consistent with his car and living arrangement demonstrates good intelligence and self-esteem. But someone who spends a lot of money on a depreciating asset and nothing towards a potentially appreciating asset is not someone you probably want to be with long term.
If he can so easily be swayed by the “different values” argument on two of the most expensive things one can buy, what other inane logic might your partner come up with? In evolution, intelligence is attractive because it increases a person’s chances for survival.
4) The Future
Living in the moment is all fine until you run out of money. But a great partner is someone who looks to the future. Buying an expensive car he can’t comfortably afford means he is forsaking your future for his immediate pleasure.
Buying a two bedroom or larger property signals that he sees a place for the two of you to grow. It’s much better to be with someone who is thoughtful.
More Things I’ll Teach My Daughter
A father just wants his daughter to be happy. If my daughter can find something she loves to do, earn enough to live a comfortable life, and find someone she loves, I’ll die a happy man!
With the focus of wanting happiness and independence for my daughter, here are some other things I’ll teach by daughter before she leaves the house.
1) Don’t be financially dependent on anyone.
Financial dependence is the worst. I strongly believe each spouse or partner should have his or her own money. By having your own money, you have the financial freedom to do as you please. There won’t be a need to ask for permission or feel bitter about your household’s finances.
Of course, a couple is more than welcome to build a financial life together as a team. However, no matter how strong the partnership, always have an income source and assets of your own.
Divorce is common. If you spend 10 years being a stay at home mom and then end up separating, getting a well-paying job will be hard. Always keep your skills updated. Do some consulting or part-time work throughout motherhood. Hope for the best, but protect yourself from the worst.
2) Avoid a partner who is unable to practice stealth wealth.
The more a man has to show off his wealth, the lower his self-esteem. It is also likely that people who show off their wealth the most have the least amount of wealth.
Try and find a man who doesn’t tell strangers they went to Stanford within the first minute of meeting. Find a person who talks very little of his wealth and how he was able to accumulate his wealth.
3) Find someone who credits his success more to luck than skill.
Plenty of people work hard. But some people get much farther due to very fortunate circumstances. The playing field is uneven. Of course your chances of becoming a millionaire are much higher if your parents are already rich. Of course you’ll have a better chance of getting into your parents’ private university as a legacy.
Not only is the playing field uneven, the game is rigged. If you can find a partner who truly appreciates and recognizes his good fortune, there’s a lower chance he will take you for granted. He may also do more to provide for the family.
4) Find the optimist.
The world is a messed up place. Live long enough and we will all endure a tremendous amount of heartache and suffering. The key is to find the optimist who always tries to look at the bright side of things.
For example, although the global pandemic is a killer, it has also minimized the number of school shootings and traffic-related deaths. Find someone who can recognize the gravity of a bad situation and also look forward to a better future.
5) Find a partner who feeds you first.
Finally, dear daughter, I’d like you to find someone who is willing to feed you first before feeding himself. This simple gesture will permeate through everything he does – from considering how you feel first before making any big decisions to taking care of your parents and children.
Because he is so thoughtful, you will love him even more over time.
Below is a great comment from a reader which I think is true:
There needs to be a shift in focus as to what the future of relationships will look like when our daughters grow up.
I also have a 3 year old daughter, and given the trend and data that is out there, I worry LESS about her capability and ability to make a good living, and worry MORE about her finding a partner that will support her in these endeavors.
In essence, given the education and salary trends of girls/women now, my prediction is that my daughter will out-earn the pool of eligible men (or whomever) she may be interested in as a partner. As such, she doesn’t need to pay attention to a car, net worth, or financial capability of her partner, but more so his ability to be supportive of HER career, ability to earn, etc.
The tables will have turned, and just as men of 20 years ago tried to find a partner who would be a good mother, manager of the house, etc., my daughter will need to find a man that is willing to also be a good father, manager of the house, and caregiver.
Be Your Own Independent Person
“As I will tell my daughter one day, it’s easier to go from a hard life to an easy one. An almost superhuman effort is needed to go the other way.” – FS reader.
Look, single guys in their 20s can be forgiven for driving outrageously expensive vehicles that cost way more than 10% of their gross income.
A nice car is the first thing many guys who start making money after college want to buy. In their 20s, most guys and gals aren’t thinking about settling down, starting a family, or retiring early. They just want to live it up to the max!
But if you’re in your mid-30s or older and are still spending money frivolously, just know that eventually, not only will you not have as much wealth as you hoped for, you’ll probably need to buy an even more expensive car to impress other people.
This is because you’ll be older, less in shape, less attractive, and without the skills of a smooth communicator who doesn’t need to rely on an expensive vehicle to get a date.
Life is obviously much easier if you end up with a rich partner or spouse. However, life is also incredibly rewarding when you can be your own financially independent person.
We know our kids will have setbacks. It’s just a part of growing up. All we can do as parents is teach our kids as best we can.
Parents, what are some things you’ll teach your daughter? If you are a daughter, what are some things you wished your dad taught you?