Giving Your Kids a Leg-Up

Although this is a blog about stock investing, sometimes it’s useful to look at different types of investment of arguably much greater value.  In this case, I will be offering some very practical ideas on how you can invest in the future of your children based upon how my parents, especially my mom, invested into mine.  Even if you don’t have any children of your own yet but plan to, you can learn some very useful advice if you choose to read on.

It is becoming harder in our western society for young people entering adulthood to have any sort of financial advantage going in.  There are many factors against them.

First of all, many are simply repeating the financial non-discipline of their parents.  Monkey see, monkey do.  If mom and dad don’t teach them what to do with any money that they earn or receive, then it will pretty much ALWAYS get spent.  That’s just human nature when discipline is not involved.  Little to any of it will make it into at least a savings account let alone any sort of investment, like a mutual fund or ETF or stock, that will help them weather the storms of the not-so-distant future.

Also, if they see their parents resort to swiping a credit card every time they make a purchase, kids can easily fall into a similar trap of thinking that life is all about relying on credit instead of having any sort of cash savings.  The result can be a miserable lifestyle of debt.  This won’t change unless a parent takes the time to tell them, first of all, how they earned a credit rating in the first place, that there is actually a limit to every form of credit, plus what happens if they decide not to pay off their debt each and every month.

Second, the education system doesn’t teach much to do with financial management and basically nothing about investing unless a student is blessed to have that one-in-a-million teacher who understands and practices it.  It’s simply not in most curricula.  So for parents to expect that the education system will make up for any of their own lack of financial understanding and discipline is shirking responsibility.  Parents have no right to blame anybody else about the bad financial habits of their children unless they do a gut-check to see if they themselves are not the real problem.

For parents to expect that the education system will make up for any of their own lack of financial understanding and discipline is shirking responsibility.

I’m not generally a conspiracy theorist but some things appear incredibly obvious and intentional after you give them some thought.  In a nutshell, I believe that the lack of financial management training in our education system is because our governments want to perpetuate consumerism.  Who controls the education system?  Governments.  And who generally controls governments?  Is it not mostly banking and corporate interests and in turn those few people who own and control them?

Consumerism is the driving force behind capitalism and so it needs to be ingrained at an early age.  The survival of the capitalist establishment depends upon this, or at least those in control of it.  If there was too much emphasis in our education system about financial management then where would all the spenders be?  How would banks and other lending institutions survive if everybody kept their cash stashed away in their own homes, if people could pay cash for everything, even their homes, and nobody needed to borrow?  I don’t believe we realize just the sort of power that big money institutions play in the total control of our society, including its education.

As an aside, does that mean I’m against capitalism?  If I was then I wouldn’t be writing this blog, openly telling people about how to take advantage of living in a capitalist society rather than being taken advantage of!  By encouraging ownership in the companies that benefit from consumer capitalism by owning shares in companies, a person can earn money back from this system rather than always feeding it with their own money.  Otherwise, we’re all simply slaves to it, lemmings, always feeding into it without really considering how we hurt ourselves and our families by doing so.

By encouraging ownership in the companies that benefit from consumer capitalism, a person can earn money back from this system rather than always feeding it with their own money.

The third factor against many adults is a result of the combination of the first two.  Bad financial habits combined with a lack of knowledge about how to fix them means that most parents simply can’t help their kids get a leg-up, a head start, a financial advantage as they enter adulthood.

The rest of this post is about a story and then a great resource about how you as a parent can provide a financial leg-up for your children as they enter adulthood.

A story

I was blessed to have a mom who, from when I was an early age, taught me the value of money.  One of the first things that she ever taught me was, “Save every penny!”  Now, kids go one way or the other with such advice, basically never a middle-ground, but I was one of those rare kids who took her advice and the result was getting more excited as I saw those pennies grow into dollars and then into hundreds of dollars.  As I saw the physical amount of that money grow, stashed away in jars and the like, the less willing I was willing to let anybody else have it, meaning that I was less willing to spend it the more I had.  (I have fortunately, in my adult life, learned the incredible benefits of giving some money away, but you can’t bless others with what you don’t have!)

Perhaps that sense of being careful with spending is something we lose as adults when money becomes non-physical, when it becomes a series of numbers on a screen or a financial statement instead of in our hands?  Modern credit in the form of plastic cards and numbers on a statement was an invention of financial institutions, was it not?  Just a thought.

Perhaps that sense of being careful with spending is something we lose as adults when money becomes non-physical, when it becomes a series of numbers on a screen or a financial statement instead of in our hands?

My mom could have stopped there, but she went further.  When I reached adulthood, she opened up an investment account for me and invested a few thousand dollars into each of two mutual funds.  She did the same for my sister.  (My sister was wise and didn’t do anything – no selling of what she had – and her money grew and multiplied over the next few years.  Her impatient brother got restless and wanted bigger returns, and so he fiddled and tweaked and began to lose money in the market.  It took him several years to learn the most important lessons about investing, the most important of which is to hold onto good investments in order to give them time to rise and eventually multiply.  Read other posts to learn about other lessons learned the hard way!)

I can’t forget my dad because, after all, he worked to bring home the largest portion of our family’s income.  But my mom handled all the budgeting and made the big decisions simply because my dad didn’t want to – it just wasn’t his thing.  If there’s anybody who should be blogging or writing a book or speaking and teaching about the matter of financial management, it should be her!

When I graduated from university and got my first job, they also paid for my first car, a beater mind you, but a car nonetheless, with the understanding that I pay for everything else.

I suppose I should mention the icing on the cake, namely their willingness and ability to pay cash for my entire university education.  I should also mention that my mom was a department store cashier and my dad was a commercial artist, very middle-class at best.

Words can’t describe how wonderful those gifts were to me, how great it was to know that I had parents who had my back and cared enough to not only teach me responsibility but also to teach me about generosity by giving me a leg-up when I needed it the most.

Because I was first taught financial responsibility at a very early age and because my mom could see it in me, she didn’t need to fear that these very generous gifts would be taken for granted.  And truly, I didn’t take them for granted.  I didn’t expect more after I got them and I didn’t even expect them in the first place.  In fact, I didn’t even feel as though I deserved them in the first place!  Responsibility breeds gratitude.  These lessons and these gifts gave me a solid foundation upon which to enter that scary world of adulthood.

Responsibility breeds gratitude.

What about you?

If you’re a parent and have just read this and thought to yourself that you could only dream of providing even a small financial gift to your kids as they enter adulthood, who says that you can’t?  As the sayings go, “It’s never too late” and “Never say never!”

Yes, you yourself may have been the recipient of bad or no financial advice while you were growing up and maybe you’ve carried on those habits, but there’s nothing stopping you from un-learning the bad habits and learning the good ones.  As another saying goes, “Where there’s a will, there’s a way.”

Maybe reading my story already gave you some really good ideas about how to bless your children as they enter adulthood, but now you need to find the money and/or the financial discipline to begin working toward those things.

I could write exhaustively about all the financial management clichés:  avoid consumer debt, put 10-15% of your net pay each month into an investment (mutual fund, ETF, stock, etc.), save up $1,000 for an emergency fund, etc.  But frankly, there are already volumes written about these things.  I’m not going to try to re-invent the wheel.  In this day and age there’s certainly no lack of information, but it’s tough to figure out where to start and who to trust.

Might I strongly, emphatically suggest that you start with what Dave Ramsey has to say about the matter?  I can’t think of a more uncommon-sense approach (common sense died a few decades ago) to money management for the everyday person than what that man has to offer.  If you’re serious about learning how to not only turn your financial ship around but – most importantly – be able to also eventually bless and give to others, especially your own children, then I can think of no better place to start.

Hopefully you have been encouraged about how to not only give a leg-up to your kids, but to also eventually leave a financial legacy that can last for generations.

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