At a very early age, I can recall my dad talking openly about money. Whether we owned a paper route, did odd jobs around the house, or babysat for the neighbors, we were taught to save at least 20% of what we earned. By the age of 12, we had opened our own checking account, using our library card as our official ID (don’t know if that would work today).
Most of us learn about money and finances, what to do and what not to do, from our parents. Whether they taught us directly through intentional conversations or indirectly as we watched them make their own financial decisions, we learned something. Some good, and some bad I’m sure. There seems to be minimal financial education in our school systems, which is why it’s so important for us to take an active role in laying a solid foundation for our own kids.
I recall a particular appointment when a friend of mine asked if he could bring his son by the office for an appointment. His son was in his early 20’s and just starting to earn money of his own. I was delighted that my friend saw the value in helping his son develop a strong financial foundation. We started discussing the fundamentals and I was surprised at how much my friend was asking questions as well. It reminded me that it can be beneficial to review the basics at any age. The son was genuinely engaged and interested and you could feel a little excitement in the room.
Don’t be shy about including your children in your planning process. Bring your adult children to one of your next planning meetings. There is so much to learn. You will feel better and your children will be better equipped to offer assistance in the future. As they participate in the process, they may glean information that will help them too. Often as you age, children are not aware of your wishes, the state of your affairs, or what to do if your health declines. Who will care for you? Do you have long term care insurance? Do you have the proper legal documents in place for someone to act in your behalf if you should become incapacitated?
What would happen if you were to pass away? When you consider your legacy, what are your goals? Do you want to help pay for your grandchildren’s college? Leave money to your favorite charity?
Multi-generational planning is an important step in ensuring continuity in your estate plan. It’s heartbreaking to see devoted parents working diligently on their own plan and then to see it fall apart when the money passes on to the next generation. Parents may sometimes seem embarrassed or shy about sharing their financial information with their children. Whether you have $100,000 or $1 million, your kids can learn from you. We all have things we wish we could have done differently, or are proud of what we did right. Let your kids benefit from your wisdom and share the knowledge that you have gained. If something were to happen to you, what would you want your children to know? What decisions would you want them to make on your behalf? Holding a family meeting with your advisor can help facilitate the desires of each generation, whether it’s accumulating wealth in the early years or protecting wealth as you age. Often there is a generation gap in the way we think. What might make sense to you might not ring true for your children or grandchildren. Peace of mind can come from engaging your children in the process.
As I mentioned, my dad has never been shy about sharing his financial picture with us. Each time my parents leave on a trip, the kids get a printout of their current financial statements and know exactly where their will and other essential estate planning documents are stored. We are grateful for his diligence in keeping us aware of his financial situation and his wishes. We know that my dad is only looking out for our best interest and doesn’t want us to be burdened if something were to happen to them. Because we know what they want, there is no uncertainty between my siblings and I either. Many family disputes occur when a parent passes away because the children are often left to figure out what mom or dad wanted. This can be avoided with a little extra planning.
What does your financial future look like? Do your kids know your intentions? Next time you’re up for a review, don’t forget to ask if your adult children can attend. Your children will thank you, and I bet you’ll feel better too!