The Best Piece of Financial Advice My Dad Gave Me was in the Parking Lot That Sold Used Cars

One sentence shaped the way I look at money.

I grew up across the street from a large used-car lot in rural PA, outside of Philadelphia.

We lived in a gorgeous four-story house made from solid stone built in the 19th century. It was a fortress. People took pictures of our house from the air.

My Dad, who came from less than nothing, worked his a** off putting himself through college while working as a security guard, then accounting school, making a lot of money early in his career. He did the taxes for the used-car dealership across the street from our house and many other businesses in our small town. He would often barter his accounting services for goods.

From the lot across the street, my Dad took his payment in used cars.

I got a used car when I was 16. Lucky me! I remember three things vividly about the day my Dad and I walked across the street to the lot: picking out the car with him, how his client (the owner of the lot) treated him with the utmost respect and the advice he gave me as we were returned home.

Walking the lot together with the owner, we looked at every car. Checked for dents, looked under hoods, smelled the interiors, making sure the previous owner wasn’t a smoker. We settled on a beautiful brown Honda Accord with tan interior.

My wheels represented one thing — freedom. Freedom to listen to whatever music I wanted. At whatever volume. Freedom from relying on my older sister or parents to shuffle me to my friends’ houses or to the mall. My wheels took me anywhere I wanted to go. Almost. My world expanded, if only a bit.

While picking out freedom on that lot that day, my Dad taught me a lesson that has guided my decisions about money and my financial life. I can still hear my Dad saying, “you lose 10% of a new car’s value when you drive it off the lot. When you buy a used car, that 10% can go somewhere more useful, like a savings account.”

At the time, the only money I made was in tips as a waitress working in a greasy diner at the local golf course. Losing 10% of the total value of a new car in such a short time after purchasing it seemed excessive to me.

As it does to people who are good with money.

People who are good with their money don’t make purchases that cost them 10% in a matter of minutes, and they don’t make purchases based on status.

Wealthy people are good with money, and that is how a lot of them got that way. That one sentence taught me the value of money.

Most people who are millionaires didn’t get that way by chance — they saved, invested, and worked their way to millionaire status. — Business Insider

According to Business Insider, most millionaires surveyed drive used, American-made cars. You don’t have to go that far. Toyotas and Hondas are great cars. They last a really, really long time. I was lucky enough to get the last Toyota Prius on the lot (barely used) the year after they came out. Toyotas are built to last. Rarely do millionaires who are good with money lease new cars, nor buy luxury cars.

Personal finance author Thomas J. Stanley interviewed over 1,000 millionaires in researching his book, “The Millionaire Next Door.” In his research, Stanley found that “50% of the millionaires we surveyed never spent more than $29,000 in their entire lives for a motor vehicle.”

And yes, there are those millionaires who buy new cars, roughly 63 percent, but they don’t keep buying new cars every year. They don’t purchase another car for four or more years.

America’s wealthiest people are more frugal than you think.

TrueCar did a study back in 2012 where they identified the ten most affluent zip codes around the nation according to the IRS’s data and then found the most popular cars that were sold in each zip code.

Among all of the 10 wealthiest zip codes, downtown Chicago seemed to be the most down-to-earth as the most popular cars sold there Volkswagen Jetta, the Honda CR-V, the Jeep Grand Cherokee, and of course, the Honda Civic. In California’s wealthy zip codes, the Toyota Prius was the top pick.

A new car loses 10% of its value in the first month and 20% of its value in the first year. Those good with money won’t take that kind of a loss. People who are good with money are into saving money, not wasting it. The best value comes from buying used cars, not leasing, and holding onto that car for a few years.

The money you save by buying used can go into an investment account. Those good with money think this way.

The lesson also taught me that you are not what you drive. Nor is what type of car you drive an indication of how much money you have in your bank account.

Your value as a human being is not determined by the car you drive. Keeping up with the Joneses can land you in the poor house and racking up charges on credit. If your interest rate is 20% and you carry a $1000 balance, you would owe roughly $200 in interest after a year. That is flushing abundance down the toilet.

Spending money on things you can’t afford, paying for status, is the opposite of creating abundance. It’s the opposite of freedom. It’s a prison — the prison of paying interest on things you couldn’t afford in the first place.

When it comes to the quality of your life, the only person that matters is you and not the Joneses. If Mrs. Jones offers you friendship based on what you drive, you might want to rethink being friends with Mrs. Jones.

If I drive a Tesla and you drive a Toyota, that doesn’t make me more valuable than you. If you’re driving a Toyota that is paid off, and I’m scrambling to make my monthly Tesla payments, you are freer, richer, and wiser with your money than me.

Most everyday millionaires aren’t big spenders, and that typically goes for their partners. People who are good with their finances know that what matters is not spending more money than you make on things you can’t afford.

Saving 10% on buying used is healthy for your bottom line, increasing your freedom.

Just like that used Honda did for me by giving me another kind of freedom along with a valuable money lesson from one sentence, “you lose 10% of a new car’s value the moment you drive it off the lot. Save it instead.”

Jessica is a writer, an online entrepreneur, and a recovering Type A personality. She lives in Los Angeles with her extrovert daughter, two dogs, and two cats.