What A Financial Coach Hopes To Teach His Kids About Money

April 10, 2018

My family and I just returned from an amazing vacation, which has me reflecting on some of the major life lessons that I have been trying to teach my children. As a financial planning professional, many of these life lessons have a financial theme, but the most impactful money lessons are really the ones that are about life – not just “getting through life” or “trying to make ends meet” though. I’m talking about living a life of purpose and meaning.

“If a person gets his attitude toward money straight, it will help straighten out almost every other area in his life.” –Rev. Billy Graham

This is a simple yet powerful quote that stresses the importance of having a proper mindset when it comes to managing personal finances. Here are a few lessons that I’m trying to communicate to my children as they continue to learn and grow.

True financial wellness requires action

Financial wellness is more than just a feel-good buzzword/phrase. It’s where financial education and action meet to produce real results. Financial wellness requires knowledge and action with the end result being a positive sense of well-being backed up by actual financial behaviors that help us instead of create stress. No matter what my children are trying to accomplish in life, I want them to take action and always feel empowered to change their circumstances and the lives of others in a positive manner.

Countering harmful money beliefs

Money isn’t the root of all evil. This is a potentially harmful money belief that is often based on a distorted view of personal or family experiences. Stories of corporate greed, financial fraud, and other money-related wrongdoings help perpetuate this belief.

The reality is that “love of money” is the problem, and financial avoidance is not the solution. I don’t want my children to ever forget to express gratitude for their financial blessings, but I also don’t want them to forget their duty to be good stewards of their future resources. A healthier but not obsessive focus on money matters is needed in this day and age where money remains a taboo topic for many.

It’s not about luck

Wealth doesn’t require luck. Where are the real role models anymore? Pro athletes, musicians, and actors dominate most of the news cycle and trending social media feeds. This isn’t anything new, but what is alarming to me is the idea that wealthy individuals somehow accumulated their riches by luck or greed.

Now I realize that we occasionally hear about the Bernie Madoffs of the world who cut corners or the lottery winners that hit the jackpot. But the Millionaire Next Door is more likely to have achieved his or her success through hard work, persistence, trade-offs, and having a dream they were willing to turn into an actionable plan. I want my children to realize that it’s true that some people have more obstacles to overcome in life. However, your background doesn’t guarantee future success nor does it predict certain failure.

Never judge your success or status in life through financial measures

Perhaps the greatest lesson that I want to convey to my children is that their own determinations of successes or failures in life should never be assessed by their income or net worth statement. This sounds like such a simple concept, but I’ve met too many pre-retirees that were financially prepared to leave the workforce but lacked purpose and meaning in their lives because they were too focused on accumulation rather than living a life.

Experiences matter more than stuff

I want my children to enjoy spending time with me as their dad and mentor and not focusing on just spending time with their stuff. This applies to me as well. If I decided to be too product-oriented as a parent, that could be sending some negative messages to the people that I care about the most.

This doesn’t mean that we cannot enjoy some creature comforts that make life enjoyable. But it does mean that there always needs to be balance, and I want my children to value time more than the things that could rob me of that valuable time with them. As a result, we make sure our spending plan prioritizes those summer camp experiences as well as family vacations and plenty of staycations.

Avoid debt if at all possible

Never let debt become your master. The average American household has over $130k in debt. Among households carrying credit card balances, the average debt is $15,762.

Borrowing makes sense in so many situations, yet the struggle is real for those who are having trouble making ends meet because they are over leveraged. What’s the joy in busting it at work all day just so you can keep up with credit card bills, auto loans, and mortgage payments on a lifestyle you couldn’t afford in the first place? For my own children, I will constantly guide them to challenge the status quo and never become a slave to debt.

Remember that your current circumstances aren’t forever

It’s not surprising that retirement preparedness research suggests negative debt attitudes are related to decreased retirement confidence and lower overall financial wellness. More immediate consequences of debt can be seen in the eyes of recent graduates who are entering their post-grad lives feeling burdened by their loans. Many are delaying future life goals such as marriage or buying a home based in part on debt concerns. My advice to them is to not allow your current circumstances to create a sense of stagnation in life. Believe you can make real change happen and explore all alternatives to take financial action that will move you beyond the current situation.

Money is simply a tool

In my professional role as a financial planner, you may be a little surprised to hear that I do not enjoy talking about money. I guess that I better clarify that I frankly don’t get pleasure out of just talking about money, but I do enjoy discussing ways to integrate money decisions into lives in a way that gives financial resources more purpose and meaning. Money does create opportunities, but ultimately you have to decide how to use it in your life. You can either become a wealth accumulation tool in pursuit of money or allow your wealth to do incredible things for yourself and others.

Keep the big picture in mind

Always dream beyond your current financial or life circumstances. I’m working with many individuals and families that are dealing with some major obstacles on the path to financial freedom. My message to them is the same that I try to convey to my own children. Don’t ever give up.

No matter how good or bad your current financial status may seem, it is essential to look ahead and plan for the future. Live in the moment, plan for the future, and thrive. It’s that simple.

A challenge for parents

As you consider the money lessons you’d like to teach your own kids, I suggest asking yourself the following question:

What message am I sending the people that I care about most?

Asking these types of questions as early as possible during parenthood may be the key to set up the next generation for a true path to financial wellness that is based on a solid foundation.

How I’m Teaching My Polar Opposite Daughters About Money

August 25, 2017

If you’re a parent, you probably know that sometimes you can be around your kids and wonder just how in the world they are actually related because they are so different. As a father and financial planner, I have really seen that difference in my two daughters this past year. My girls are teenagers and both are now working part-time and taking on more financial responsibility. That is where the similarities end.

Polar opposite financial personalities

My oldest daughter has a great work ethic and is a practical shopper when it comes to big ticket items, but she struggles to really plan or track her daily spending at all. My youngest daughter, on the other hand, will work only as hard as she needs to in order to make money and that’s it. When it comes to spending money, she values fashion over function and plans her expenditures down to the penny. Total opposites.

So how does a dad help these two very different daughters reach the same goal of financial well-being? Here’s how I am approaching it with each of them.

Work smarter, not harder

I don’t worry about my oldest daughter working hard enough. If things get tough, I know that she will do whatever it takes to make ends meet. As a result, my advice to her is not to work harder but to work smarter. She needs to take a look at the big picture before diving in to a project or a job to see if there are ways to be more efficient or even farm out the easier, less costly parts of a job.

Letting perfect get in the way of good enough

For my younger daughter, I know that she will have analyzed things from every angle to make things easy and efficient for her. Her challenge is that sometimes she lets the perfect get in the way of the good.

For example, she had a host of reasons for not wanting to work at the pool this summer – one of the few jobs that would take her before turning 16 this fall. She eventually found a job that was more to her liking, but she ended up only able to get 20 hours a week instead of the 32 per week she probably would have been able to get at the pool, which limited her earning potential. So for her and analyzers like her, sometimes it is better to take the good opportunity instead of waiting for the perfect one.

Finding a way to keep the little things in check

My oldest daughter is pretty good about finding a good deal when it is a big ticket item, but the little things kill her. When it was time to find a car – which she had to pay half of – she did extensive research and even though her dream car is an SUV, she realized that a compact car made more sense and found a great deal on a Ford Focus that should last her well into her young adulthood.

Day to day purchases are just the opposite – the debit card and apps like Starbucks make it very easy for her to fritter away her hard-earned money on convenience and impulse buys. She needs a better way to track her money.

She doesn’t need to spend hours each week planning out her spending, but I’ve suggested that she find a “hack” to make things easier like an app on her phone or using envelopes to limit impulse spending. Perhaps one of these six ideas from my colleague Kelley might help.

When fashion gets in the way of function

My younger daughter is constantly looking for car options… and she keeps looking for champagne cars on her beer budget. She likes crossovers but the challenge here is getting her to realize that they are more expensive so she would have to buy an older, higher mileage car that likely won’t last as long. Plus they would cost more to insure and burn more gas. She may feel cooler now, but will she still feel that way having to buy a new car all on her own in her very early 20’s? The jury is still out on whether she’ll listen to me or go with her penchant for fashion over value.

On the plus side, she has planned her day-to-day spending like a pro. She has literally budgeted every paycheck she is expecting between now and March to parcel out how much will go for the car, gas and her drama department trip to New York, while she plans to use her tips for fun money.

She puts her debit card away to prevent her from using it for impulse buys and only uses the cash tips for her spending money. I have given her a lot of praise for her planning and how she is managing her daily expenses.

The challenge that I talked to her about is over-planning – an issue that I have dealt with. She doesn’t really have an emergency fund or any wiggle room, so when she doesn’t get enough hours or things happen, it puts her into a tizzy. Planners like her and I will always struggle with over planning but having an emergency fund or a “life happens” line item in the budget can help ease the stress of things not going according to plan.

Different girls, same end goal

Despite their differences, my girls are great kids and both have a lot of money skills. The different personality traits mean that they may need different approaches to get to the same goal but I expect them both to do well in life.

Want more helpful financial guidance, delivered every day? Sign up to receive the Financial Finesse Tip of the Day, written by financial planners who work with people like you every day. No sales pitch EVER (being unbiased is the foundation of what we do), just the best our awesome planners have to offer. Click here to join.

How to Teach Your Kids About Money

May 04, 2016

A recent survey on kids and money revealed that 4 out of 5 Americans believe that an allowance helps to teach children the value of money and financial responsibility but only 68% actually pay an allowance. With student loan debt growing at an average of over $2,700 PER SECOND, it’s essential that kids enter college with a baseline of knowledge so they know what they’re getting into with this debt. If you’re not modeling good behavior for your kids, you may be setting them up for financial stress down the road. I don’t have kids yet, but I have a lot of plans for how we will ensure that they set themselves up for financial success. Here are some ways to teach your kids (or nieces and nephews) about money before they have to start making important decisions on their own:

Start early: As soon as kids learn how to ask for things (or start throwing themselves screaming on the floor of the grocery store because you won’t buy candy), they can understand the concept that they have to wait to buy something by saving up for it. Instant gratification is a problem that plagues humans for life, but teaching kids how to delay it is a predictor of future success. Whenever your child receives money, have them add it to a jar or piggy bank and consider keeping a paper record to instill banking knowledge as well. Every so often, help her count to see how close she is to her goal. Help keep her eye on the prize by explaining how much closer she is to reaching the goal with each addition.

Explain trade-offs: Once your child enters school, he is ready to learn that when you spend money on one thing, you’ll have less to spend on another. Use grocery shopping as a way to demonstrate this. Give him a budget for his own treats, and then as he’s making his selection, explain how buying expensive yogurt might not allow him enough to also buy his favorite juice boxes. Share your own financial decision making as you’re shopping for the household as well.

There are also a bevy of free web-based money games out there. Try the Great Piglet Challenge or Kids.gov for a variety of fun games. Heck, try them yourself. (I’ve yet to conquer the Great Piglet Challenge!)

Consider an allowance: Whether or not you think kids should “earn” money through household chores or if you consider pitching in to be a part of family life, an allowance is a great way for kids to learn how to spend and save. You can also explain how compound interest works once kids reach the “tweens” stage. Use real numbers and say, “If you save $1 per day starting now, you could have over $26,000 by age 65. But if you wait to save until you’re 30, you’ll only have about $15,000.” This may make it easier to talk your tween out of buying a daily sugary snack at school and instead save the money toward a new video game.

Consider college costs: Whether or not you’ll be able to afford to send your kids to the college of their choice, discuss how their decision will affect you financially. If your child will require financial aid in order to pay for school, share your own struggles with debt as a way to explain the consequences of student loans. And don’t shy away from having them take a part-time job to save toward spending money in college. Understanding how hard it is to earn money will make them appreciate the value and think twice about blowing it all on beer and pizza…just most of it.

Drive their own decisions: Once your teen is ready to start driving, instead of just handing her the keys and crossing your fingers that she’ll drive safely, put some of her skin in the game too. My parents had me take care of my own car insurance when I got my first car, which was a great way for me to learn several money lessons. Instead of doing it for me, my mom had me call their insurance contact to ask to be added to the policy. The agent walked me through the additional costs and I handed over money to my dad each month to pay my share.

If I was late or short paying, my car was parked until I paid up. I not only learned how to budget for my bill, I was empowered to take responsibility and when it came time for me to get my own solo insurance policy, I knew what I was doing. Thanks, Mom and Dad!

Most importantly, it’s vital to model good money habits for your kids. We all have our own money stories – our personal frame of reference based on our own experiences growing up around money. For most of us, the biggest influence in our stories came from our parents. Set your kids up for success by rewriting your own story to one of success and financial security.

What’s the Point of Carrying a Prepaid Debit Card?

April 15, 2013

I’m a big basketball fan, so I’ve been pretty much glued to my TV the last few weeks watching the NCAA Basketball Tournament. And while I love the tournament, the only downside to catching the excitement live are all the commercials. And I have seen a ton of commercials over the last month. Continue reading “What’s the Point of Carrying a Prepaid Debit Card?”