Money, Kids and Character Building
Posted on Tue, Aug 31, 2010 @ 08:00 AM
By: Richard C. Salmen, CFP®, CFA, EA
Senior Vice President of GTRUST Financial Partners
2010 Chair, Financial Planning Association
A disturbing trend has emerged among our clients over the last five to ten years that merits discussion within our professional forums. You hear the jokes from parents about their kids not wanting to leave home or that they left to go to college but now they are out of college (possibly with a degree?) and are now back home living with Dad and Mom.
As I look back on my own life, I remember clearly being excited about the opportunity to leave the nest and strike out on my own. Adulthood and the freedom associated with it could not come soon enough. But, upon reflection, I also realize I was not taking all that big a step down from a lifestyle perspective as I made that leap into living on my own. I was not giving up cable TV, high speed Internet access, a cell phone on the family plan with unlimited texting or the opportunity to eat out with my parents at their expense many times per week.
We have had clients hire us where they are making car payments
not only on the two newer cars for themselves but also on a new car for each one of their children when they turn sixteen and start to drive. Over and over again clients come to us wanting to figure out how they can help their twenty-something son or daughter pay off their five or ten thousand dollars worth of consumer debt. There seems to be a sense of obligation among these parents that this is THEIR responsibility, not that of their now adult children.
When this comes up, we have the same conversation with each client. We ask them to think back to their early adulthood. Was life easy for them at that time? Invariably, the answer is no that they had to struggle and scrimp to get by, pay for college, rent their first apartment, drive a broken down old car, etc. We then remind them that struggling for success and developing the resilience to stand on their own two feet is a significant part or the reason they are financially successful and stable today.
Literally, they are taking away their children’s opportunity to build character and to grow into adulthood. But, their response is ALWAYS the same. “We do not want our children to have to struggle like we did. We have the money to make it easier for them.” That is true they have the money. Then we hit them with the punch line. In twenty years of working with clients we have NEVER, not one time, had parents pay off the debts of their children with the result that the children then made better decisions with money going forward. I repeat again, not one time.
Allow your children to struggle and build character like you did if you want them to follow your path to financial success.
Editor Notes:
Read this article on financial literacy for teenagers for more information.
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