Lifestyle July 20, 2017

Creating financially independent kids stops and starts with parents

One month ago, I was asked by the media if I thought that kids should follow their dreams. I answered, “No, they should chase them.” The person interviewing me wrote up the story ‘Hannah Doesn’t Believe Our Kids Should Follow Their Dreams’. From that headline, a whole lot of comments ensued. Some positive. A lot negative. It’s funny how when only half the story is presented the wrong conclusions are often drawn.

 

 

As a parent, I want my kids to reach for the stars. But telling them they can reach, and showing them how to reach are two very different things. Telling my kids that they can be anything they want, without acknowledging their strengths for them to lean into, and identifying their constraints so they can learn to combat them, is like giving half the message.

 

 

In my day job, my team and I work with adult clients to help them achieve their financial capability. We call ourselves financial personal trainers and our number one role is to help our clients be financially better off over a 12-month period, than what they were on track to achieve themselves. The means and life stages of our clients are varied. Some are earning $50,000, others more than $1,000,000. Some are sinking, others are flying, most floating. Some clients are worth negative $100,000, others are worth tens of millions. But the one consistent theme is that each client knows that their relationship with money could improve, and that they are capable of getting better results than their bank balance might initially suggest. That is when enableMe comes in. When we work with our clients we encourage them to bring their kids to meetings so their kids can ‘catch’ the point that money is to be mastered and that it is the sum of small but purposeful actions that create financial success. Money mastery comes more naturally to some than others. It certainly helps if you are a programmed saver with a clear strategic emphasis. But for many of us, this is not the default. Too many of us are shoppers, without a financial goal or plan, which in turn means we remain financially aimless.

 

 

In researching how to create financially capable kids, it became clear that parents are not mastering money themselves, making it pretty hard to then teach their kids. Any teenager, when they get a whiff of hypocrisy, is going to throw the lesson back in your face. As parents, we need to be better with our money so that our kids are better. Money is not to be revered or feared. Financial stress is not supposed to create anxiety, reduce productivity or cause relationship breakdown; but unless you take control of your financial situation, it will do just that.

 

 

After two years of research and the release of my new book Pocket Money to Property — How To Create Financially Independent Kids, it has become clear that our kids are not learning what they need to about ‘adulting’ (in the financial sense) before they leave home and this is disadvantaging them. We encourage our kids to incur student loans without them stress testing their career path or the return on investment for the funds advanced. Too few kids are not working before or during university. As parents, we know that money underpins our self-worth, our self-esteem, our general wellbeing — yet we don’t discuss it honestly. Our kids pick up on this, and the scary thing here is that they seek answers from Google, or their peers, who are also frighteningly under-informed.

 

 

What we learn is that financial success is the result of numerous little steps paired with a purpose or strategy on becoming the best you can be with money. By the time our kids leave home they need to have understood the concepts below. If you are not positioned well to explain it to them, then have someone else do it, but make sure your kids are learning what they need to, so deciding whether they incur a $50,000 student loan becomes an informed decision as opposed to ‘well that is just what everyone else is doing’.

 

 

What kids need to master before leaving home:

  • Understand and master cashflow management
  • Know their money personality
  • Understand how business and leverage works
  • Understand how to develop adaptability, agility and grit
  • Know their financial and emotional weaknesses
  • Understand what life costs
  • Know how to set and challenge goals
  • Have a financial strategy to execute

 

 

If the parent has an unhealthy relationship with money, their kids are likely to have one as well. The difference for our kids is that the financial tides have turned during our generation. For the next generation, it is no longer sufficient that you spend less than you earn and work hard. That will not ensure property ownership, whether you like avocado on toast or not. Our job is to equip them for the reality of their future. Let’s not tell them only half the story, but instead show them how to be better because we are better ourselves.

 


Words: Hannah McQueen

Hannah McQueen | enableMe
Auckland City
Visit enableme.co.nz
0800 897 898

You Might Also Like

Leave a Reply