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Starting Out

The Best Money Advice My Dad Ever Gave Me

Papa Rapacon has successfully retired by taking calculated risks and educating himself about finances.

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My father, who my sisters and I have always lovingly called Papa, enjoyed a long and happy career. Now he gets to enjoy the fruits of his labor: a long and happy retirement (hopefully).

See Also: Knight Kiplinger's 8 Keys to Financial Security

To reach this major milestone and ensure the financial security of his senior years as well as his estate, he made a lot of smart money moves throughout his life. And he's never been shy about sharing his wisdom with others, especially his children. Here are the seven best financial lessons he's taught me throughout my life:

1. Take calculated risks.

At age 24, with a new and pregnant wife and just $50 in his pocket, Papa moved from the Philippines to the United States. To be clear, theirs was not a dramatic and scrappy immigrant story. Yes, their move came with risks. They journeyed halfway around the world, leaving behind their beloved home country and betting on the American dream—a better life for their kids. But their route was well planned. He was prepared with a medical degree and a residency waiting for him in Ohio, so the odds of succeeding in a new land were in his favor.

Especially when you're young, you need to be willing to take risks. Whether it's moving to a new city or investing in stocks for the first time, doing something new may be scary, but it might also offer the greatest rewards. The trick is to have a well-devised plan. And remember: If you fail, your youth affords you plenty of time to recover.

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2. Pick the right partner.

My dad would not have made it to the States or to retirement (or through breakfast) without the help of my mom. She was actually the one who pushed him to take the leap overseas, having learned from her dad that the U.S. is the land of opportunity. She supported him throughout his career, taking care of their home and family so he could focus first on studying and then on working. She also managed the household budget, including balancing their accounts (with an actual checkbook—so old school) and handling the banking (with actual tellers—super old school).

We can't all be lucky enough to find one special person to be a complete support staff. But you can be smart enough to look for a partner who will help you reach your maximum potential. Before you marry someone or otherwise tether your life to another person, be sure you're on the same page when it comes to career and finances. You don't have to agree on all money matters, of course. For example, my dad has always been a saver while my mom tends to be a spender, but they've made their marriage work for nearly 45 years. What's most important is that you are open with each other and agree on common goals. These four critical questions can help you get the conversation rolling.

3. Education is key.

My dad's MD was his ticket to a comfortable life in the U.S. But his schooling didn't stop there. After his residency and before starting practice as an anesthesiologist, he furthered his education with additional post-doctoral training in neonatal intensive care and pediatric anesthesia. Adding these skills to his resume took just six extra months of study—plus a brief move to Los Angeles, sadly before I was around to enjoy living there—but forever boosted his career opportunities.

Indeed, more education tends to lead to bigger paychecks. According to the U.S. Census Bureau, the median annual pay for high school graduates is $27,528; a Bachelor's degree bumps that median up to $50,254, and a graduate or professional degree does even better with $66,493. If more formal education isn't in the cards for you (see Should You Go to Grad School?), you can still expand your skill set and increase your earning power with free online classes on anything from coding to public speaking.

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Stacy and her papa in November 1993.

4. Financial education is also key.

Ever the studious nerd, my dad reads everything he can about—well, everything; he is an avid reader who loves to learn and believes that knowledge is power. He takes a special interest in reading about personal finance and investing. He reads Kiplinger's Personal Finance, of course, as well as competing magazines (which shall not be named), newspapers, books and a variety of Web sites. He even holds onto key stories—including those not written by his daughter—and makes notes in the margins. "Talk to planner about this," he'll scribble. On Kiplinger.com, he used our Retiree Tax Map to compare states' tax policy for retirees—and determined that moving out of New Jersey in retirement would pay off.

Financial literacy is empowering. With an understanding of how money works, you can build a smart budget, pay off debt responsibly, retire comfortably and, you know, afford stuff. The subject might be intimidating, but once you get started, you'll find that the basics are simpler than you might have thought. You know that Kiplinger's Starting Out column is a great free resource for financial education. Also check out our Basics collection to help you get started.

5. Start saving early.

My dad started to practice medicine in 1974. So when did he start saving for retirement? In 1974. And he preached what he practiced. Before I started my first full-time job, he made sure I knew to enroll in my company's 401(k) plan and to contribute enough to receive the full employer match. I hardly even knew I had the option not to do this. He also nagged… er, I mean, encouraged—strongly, repeatedly, incessantly encouraged—me to open a Roth IRA as soon as I could.

See Also: Knight Kiplinger's 8 Keys to Financial Security

Time is your greatest asset when it comes to saving for retirement. Given enough time, even a relatively small sum can grow into a sizable nest egg. For example, if a 25-year-old saves just $101 a month in a 401(k) plan, assuming an 8% return and a full employer match, she'll have $1 million by the time she turns 65 if her salary and contributions increase by 3% annually. Bump it up to $202 a month to hit $2 million by age 65. Plus, starting to save at a young age helps you develop the habit and makes it easier to squirrel away cash as time goes on.

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6. Live within your means.

Debt was a foreign concept to my dad. Growing up, if he couldn't afford something, he didn't buy it. When he finally did need to take out loans for big-ticket items (first a car and later a house), his discomfort with living with credit made him control his debts very carefully. His reward: a stellar credit score and access to the best rates on the loans he has taken.

While it's often necessary to take on some financial burdens—to pay for your education, for example (see money lesson number two above)—you must be careful about not taking on too much and about managing your repayments wisely. The key to doing that is to spend less than you earn. And the key to doing that is to have a budget. Knowing where your money is going helps you identify where you can save. When you're building your budget, be sure to include paying off your credit cards in full every month, as well as making other debt payments. For more, see How to Handle Debt.

7. Love your job.

Though my dad is now happily retired, he might have been just as happy to keep working for the rest of his life. He learned from an early age to enjoy work in general and to take pleasure in a job well done. In fact, his first job as a kid was shining shoes, which he did with his friends. Doing it together—they competed to see who could get the most customers—they found a way to make even a seemingly menial task fun.

Also, he worked at the same hospital with many of the same people for more than 30 years (as long as I've lived). His coworkers were his second family. Because he loved the job, putting in extra hours whenever possible and bringing in extra income was an easy choice. And because he invested that extra time early in his career, he afforded himself more flexibility later. He was able to schedule his work around his family—and rarely missed a tennis match, basketball game, piano recital or choral concert.

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I didn't take all of my dad's financial advice—I did major in English, much to his chagrin. But I recognize the wisdom of the path he took and have followed him in finding a career I wouldn't mind doing for the rest of my life. After all, working past retirement age comes with many benefits, including boosting Social Security payouts and giving you more time to build a comfortable nest egg. I've also managed to score a gig that allows me a flexible schedule that helps me balance work and family, including more time to enjoy my dad in his retirement.

P.S. See, Papa; I was totally listening.