What Have We Taught Our Kids about Money?, Ep #39
We spend ample time, effort, and resources to ensure our children have a good education when they leave school. However, far too many young adults enter the world without understanding personal finances. In this episode of the One for the Money podcast, I provide information that will likely help your kids more than Pythagoras’ theorem or algebra. In the tips, tricks, and strategies portion, I share a tip to help understand interest rates and rates of return.
In this episode...
We want the best for our children [01:52]
Money communication [02:59]
The power of interest [06:07]
Teaching our mistakes [09:38]
The Rule of 72 [12:16]
Interest of stocks and bonds [16:49]
Teaching money communication
Wanting what’s best for our children is the remarkable selflessness of parenting. We want them to have a better life than we have. What our children know and believe about money will profoundly shape their lives and empower them to do greater things. However, the lack of knowledge can create conditions of predictable misery.
How can we expect our kids to speak to their spouses about money if we haven’t had these conversations with them first? Money issues are the leading cause of divorce. My mother and late father are an example of this. They were married for twenty-five years and were both loving and kind. However, they were raised with different philosophies regarding money that they didn’t discuss. While a lot of stress and heartache preceded my parents’ divorce, I believe that if they had talked about money with their own parents, they would have more easily been able to talk about money with each other.
Values and money
Values determine how we manage our time and money. Jim Grubman, a family wealth psychologist, said, “Without an understanding of values, you can’t really make great choices.” Teaching children the value of a dollar or the satisfaction of earning and saving money requires conscious effort.
The goal isn’t for everyone to have the same values. Rather, families can use these values to find common ground and create ground rules for decisions. A family may talk about the principles of lifelong learning or hard work, but how individuals apply these principles can differ based on personal values.
Helping make sense of finances
Are we teaching our kids about budgeting, taxes, investing, Social Security, Medicare, and saving for retirement? If we haven’t taught them, who will? What mistakes and pains could we help them avoid? While most parents want their kids to have a better life than they had, we don’t often don’t teach them the principles required to achieve it. I offer a service to my clients to teach their children about the financial fundamentals of building wealth. Many have taken me up on the offer to discuss the principles of budgeting, discipline, saving, investing, taxes, and compound wealth with their children. While I am certainly no substitute for what parents can teach their children, I’m happy to augment these efforts.
As a Certified Financial Planner, one of my main goals is to help clients and their children make sense of the financial world. When people understand finances, they make the best decisions wherever life and money intersect. With this greater understanding, we can create a plan so their life unfolds how they want it.
Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.
Resources & People Mentioned
Most Americans don't have savings to cover a $1,000 emergency
55% of Americans with credit cards have debt—here's how much it could cost you
How do bond returns compare with stock returns? - Ultimate Guide to Retirement
Connect with Jonny West
Connect with Jonny on LinkedIn
Subscribe to ONE FOR THE MONEY on
Apple Podcasts, Spotify, Google Podcasts
Audio Production and Show notes by
PODCAST FAST TRACK
