Money Matters – Parenting Is Beyond Potty Training
Parents Matters in Children's Future Wealth or Debt
Parents and Money
It is funny this piece talks about potty training. Yet, that description is illustrative because despite the training and eventual freedom to use the potty as we desire when our parents are sure that we can handle matters, we never stop using the potty until we pass on. And it is the same with the skills that we acquire along the path of life. Our parents make it a duty that we are equipped with facilities to handle life and live it to the fullest. One of those tools is how to manage money such that we can live within our means and not fall on to dry grounds when we find ourselves facing lives challenges. For some reasons, the first word that comes to people’s mind is savings. They want me to penny pinch and quash it all on chocolate.
Yes, it was what those jars called piggy banks are for. Once your coin gets locked in there you are restricted from ever touching that currency again, at least for a long time. A training in financial discipline. But with time, we are left on our own. By the time most of us get to college, we learn that returns from securities and financial instruments such as Certificate Deposits, Treasury Bills and IRA savings accounts can be more rewarding. Some of us test the waters of security exchanges trading in stocks. And most have come out with enviable results.
I know someone who graduated with $40,000 in freely movable money in bank vault. He started with $1000 from his piggy bank. Certainly, he was the hero of his group but that result took a lot of energy and dedication. Yet, he proved that it was possible in less than 4 years of college. The onus rests on the parents to sow the right seeds before these young people take the wheel. It is the only the ship will not run aground because at 22, no one wants mummy to decide for them anymore.
Money Concerns For Gen Z
This is a general age range where in addition to obtaining financial freedom from parental control, concerns for living a good life beyond surviving becomes a motivation for their choices. They explore methods beyond the assurances of educational qualifications to secure income streams that can support their essential needs. Socially, marriage has become unconventional in Gen Z lifetimes among several changes.
They are still under the roof of their parents to save money, even married couples do. Mostly, they come through separate doors to their section of the house and mingle in the center if occasion calls for it. That’s considered money-smart and usually mutually advantageous to them and the parents. But it is a clear indicator that Gen Z is taking steps to reduce the risk of financial difficulties in the certainly unreliable economic doldrums that the future portends.
It is important for parents to have sown the seeds of what to do when this time of transitioning to the euphoria of personal freedoms come and where to get proper advice. Where to get advice is very important because Gen Z tend to trust each other more and have a salient distrust of their elders. While they have no problems talking to a professional about their issues, they value the counsel of their peers more than that of their relatives. This is a characteristic of our times, hence, they are called Gen Z.
Purpose of Managing Money
Creating a family gold heist is as important as growing and protecting the one that the family already has. Essentially, there is a money problem, even in the wealthiest country in the world debt becomes a way of life. A poor knowledge personal finance management creates a population of active spenders but passive savers. The challenge is not only for the child to run himself/herself in into a debt lock but also not turn the years of disciplined financial activities of his ancestors into a waste and debtor situation when they out of the scene. Therefore, we are talking about money earned from family property acquisitions, investments in various types of life insurance, securities and even lump sums turned into annuities, the heist includes the wages of the children themselves as they join the workforce.
The image of the future is that of a compromised tripod with clear challenges to the retirement legs of social security, company pensions and personal savings. The retirement crisis is compounded by a spending crisis and education loans with no guarantee of appropriate jobs upon graduation. This is real because the financial indices of future are changing in unpredictable ways. We all have about 40 years of active physical activity, that is, by age 65, we begin to look at retirement with seriousness. Limited capital is forcing companies to moderate offers of fringe benefits more heavily. Gen Z energy and current dynamics does not show that they understand these financial forces that has projected returns on investments in the future maxing out at 2 percent, versus the 5 percent lowest returns that their immediate elders, Millennials and Baby Boomers earned.
Even so, Gen Z still has time on their side and smart individuals can begin to look actively for financial education and instruments that bring beyond inflationary rate of returns on their investments. We can help!
Money: Tackling The Generation Z Conundrum
What Money Lessons Are You Teaching Your Children
Generation Z are people currently between the ages of ten to twenty-seven years. The marketing industry places labels like these for socio-economic and demographic delineations. Yet, despite these labels everyone passes through the post-adolescence phase of maturation as they prepare to take on the economic order of their world. Things like technology may be fashionable in the 21st Century, certainly we all had our fads in ur time and coming generations will also have their own influencers. It is important to understand that further reference to Gen Z will imply our common dispositions about that age range. We may eye the unique characteristics such as the dynamics of technological transformation presented by the 21st Century but these are for references only.
The people at the top of the Gen Z age bracket are entering the workplace at this time and many are already distinguishing themselves as leaders that can be prepared to run the world. Those under the age of 14 still get their personal expression of independence subject to parental influence, yet they are forming clear views of their decision paths in the future. They form a great group to get a few basic life lessons in place before they disappear to college and from college to their workplaces where life completely subsumes them. Pragmatically, it may be too late to begin teaching the life lessons once they have their careers in gear. Those lessons should have already become genetic in their environmental perspective by this time. Whatever tools that they own by this time determines their handling of life issues.
The economic climate of the 21 Century is polluted by the COVID 19 pandemic, and the increasingly severe effects of climate change. The projection is that Gen Z may expect nearly 2% average annual real returns on their investment portfolios. By comparison, the immediate generations before them, Baby Boomers and millennials enjoyed real returns of more than 5% with all the challenges. Therefore, Gen Z’ers must focus on saving more and investing for the long-term by acquiring the knowledge of and taking advantage of specific financial instruments that confirm sure gains over time.
Age-specific Money Problems
The primary age-specific money problem for 20-year-olds joining the workforce is procrastination. The “i-still-have-time” syndrome. I speak to many Gen Z’ers particularly about career advancement, and you can see that they revel and want to revel in the euphoria of obtaining independence from mandatory instructions and their now-truly newfound freedoms. Real freedom not promised or potential, but real power to make their own decisions and this distracts them from believing that the future is seriously close by. Asking a 25-year-old to start planning for an event 30-years later in their life is always a challenging counsel to give. Yet, this crossroad determines the future wealth status of everyone irrespective of current social status. Yes, people may win jackpot and the like but those cannot be planned. They are not deliberate. Your wages and/or promised gold pot of inheritance are the only sources that you can plan on.
For example, the age-specific 21st Century economic returns on investments challenge information is out there and accessible to anyone who cares to confirm it. However, age-specific distractions will not encourage the concerned individuals who should be taking action to manage at this time even consider that the relevance of such information to them. This is the difference between the prepared Gen Z and one that has no one to guide them. Professors teach us to understand economic indices and numbers for business management; grandmothers teach us that those indices equally affect human beings and protect their children by making sure that they learn to apply the numbers to their personal lives.
I became a dentist at 23. I was older than most in my class. There were 20-years old in the same group. In North America, the more realistic age would be 26. If you add 30 years to 26, that means that by age 56, you should be ready to retire comfortably if you were properly educated. To get the education that allows you to do that continues to evade many. Only smart grandchildren who listen to smart granny’s get it. The above claim of a wealthy future is irrespective of your financial starting point. You don’t need a huge inheritance. In fact, it may not be smart to plan on inheritance that has not been assigned yet. In addition, you do not have to be a college graduate to be wealthy or aspire to be wealthy, what we propose is that you plan for it and succeed. The trick is taking advantage of the time rather than blowing it away floating in the deceptive euphoria of your newfound freedom. You cannot leave it to when the house is paid off and the kids are preparing to leave the house. It may be achievable, but it will be daunting. Remember, thirty of your 40 active working years will have been used by that time.
What Did Your Parents Say
I was sort of snoring out the unending hours of my delayed flight in the airport one day when a family found their way to the seats behind me. Eventually, they also became comfortable and were sharing details from their visit. Apparently, the first child had come back to the US for a job interview and was in the middle of deciding whether to stay in her current higher paying job in the UK versus the more prospective career-enhanced job in the US. There was the advantage of being closer to home in the US but more importantly were the unending potentials for career growth with the US offer. For me, the message was in the money discussion.
The father was not with them. One of the younger kids, a boy asked the mom an interesting question. This young man, about 10-years old wondered what her sister is doing with all that money since she has no responsibilities, and the job practically pays for her livelihood? The mother then made everyone understand that beyond socializing, she was happy to say that not only was his sister following the education that she had received concerning money management before she left for the UK, but that she also had her eyes firmly on the ball around money management.
I listened to the details of how she went about some of the discussions that they had, and she made sure that things were in proper order, without insisting on the seeing the savings passbook which will be considered intrusion into her personal life. One of the girls also confirmed that from her own unrelated interaction with their senior sister, her could not be on better grounds financially. My lesson was that without the need to grind into details and specifics these young people understood the fundamentals of remaining wealthy. And the mother was happy that she has successfully raised that one well and was doing a good job with the others.
My own parents were not so savvy. My mother insisted that my father taught us about managing money in real life. However, all he could say is that you must learn to discipline yourself to save. That you must learn that it is not smart to spend all the money that you earn. However, what to do with the savings or how much was not clear even to him. We were expected to open a savings account and maintain it. He had a limited knowledge of the values to pass on. The 20-somethings age group needs more than that. The motivation must have a purpose that resonates with them. That is why the mom at the airport can breathe a sigh of relief because she knows that her daughter is motivated to remain safely on solid financial grounds. Essentially, the parent needs to understand what to pass on, not just how to do it.
I told one young man how the proceeds from my life insurance actually paid my way to emigrate to the United States and he was shocked. When my friend convinced to take the insurance in those early years, the money that he was projecting did not really make sense to me and I could not imagine what use I could have for them. Don’t mind the apparent sweet talk that accompanies the presentation, a 23-year-old fresh dentist hardly sees himself needing that kind of money at 60, without being able to find it. That glass barrier can be difficult to shatter. But I took the insurance anyway because I could afford it, and this was my best friend talking here. We grew up together. However, about 20 odd years later, when I needed to emigrate to the US, and decided to collect on what had accumulated, it was a mind-blowing financial leverage that smoothed my journey. I have never been able to say a big enough thank you to my friend for insisting.
Money The Creates Wealth – The Future Is Now
I know that we all get offers from our banks in the mail all the time. And they have much more detailed information on their websites, yet many of us hardly glance at them, say this is nice and then trash them. We promise to get to that later. There are more urgent bills that came with the same packet of mails that day. But we never go back to look at the offers from the bank because we don’t know where the extra money to pay those premiums will come out from. If we are not motivated enough to suffer the discipline, how much do we know to teach our children? That’s the dividing line between the wealthy and others.
During one of my trips, a female court of appeal judge who was returning home after seeing the children off to their colleges in Canada and the US was on board the same flight with me. These were kids that went to high school in Europe. And they were not even freshmen. They should know their ways around by now, you would think. In addition, she must be busy as a judge herself. Therefore, to spend two weeks chaperoning grown-ups around the world is probably not necessary. They proved that they are smart and were among the best.
In her response, she pointed out that no time spent on kids while they were still kids was wasted. That as a mother the protection of the family wealth may depend on these kids, but it was her duty to make sure that they understand the expectations. If her children failed, it meant that she had failed her primary responsibility. Being a judge is an acquired status, family name and legacy on the other hand remain permanent. The sustenance of the financial stability and wealth of the family depends on how good a good job she turned out.
Then she went on. That irrespective of whether you flew a private jet, sit in the first-class cabin or economy, the statements of account reveal your worth. It does not matter if you like Warren Buffet or Donald Trump, those three one-pager accounting statements determine what you can afford. Yet, those statements are equally valid whether you are an individual or a huge company. Whether you are Mr. Donald Trump, Trump Golf Course or The Trump Organization, what mattered is what those one-pager statements jointly tell us about you. Further, that professors teach you is how to be a good manager working for Trump Organization or Trump Golf Course, they never teach you how to be a wealthy Mr. Trump. Smart parents take care of that aspect as you grow. She had to make sure that appearances are not deceptive, they are real. At least while she still can. That’s why she had to get up. No one can do that part for you. She wants to enjoy her old age, its the least she can do to prepare for that.
One technicality every parent must understand, even if it meant asking your financial advisor is how to package your investments to beat the real rate of inflation. Beating inflationary rate is the basis of building wealth and one's investments must meet serve that purpose; build wealth. Anything short of that grounding is gambling or procrastination, and your accounting statements will not hold up when called out.
Wealth Creation and Sustenance Require Education
Every group had their adolescence to post-adolescence maturation issues; from being dependent on parents to the freedom of personal responsibility and running the world in general. A new air of realization that you now must hold the baton or take the driver’s seat. When you compound that with the mother’s fear of finally needing to lose the grip, then you understand the cause of so much anxiety and hula baloo. Gen Z’ers find themselves in the crosshairs of this social transformation in the 21st Century. Every one of them that I talked to wants to be wealthy, and they believe that they have the gifts or learned skills that can be exploited to achieve wealth. But it ends there.
Most of them lack the weapons to reverse the financial predictions for their future. They are not even considering the glaring indices because no one has told them what to look out for. Since, professors will not do this, parents who care must ensure that their children optimize their potentials. Even so, the parents themselves need to know what to teach. Do you know what message to pass on, or do you need to get some education yourself? How are you preparing your children for their future? We may be able to help, ask us!
