How to Help Your Children Avoid the Same Financial Mistakes You Made

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By Chris Alberta, president of Alberta Enterprises, Inc.

We all want our children to succeed…and many parents look back with regret and wonder how things would have been if they’d chosen differently with their finances and allocation of time.  As I sit with people entering or already in retirement, trying to manage the adjustments needed to live for another 30-plus years without income, there are a few glaring aspects that seems to pop up time and again.

Invest in yourselves, in your memories, and in experience before THINGS.

So very many people work hard…almost too hard.  In an age where both spouses often work full time, it can become a game of “keeping up with the ___________’s”, rather than “wait for the bigger house, the pool, the jet-ski, etc.”  Often clients express to me that while they ACQUIRED many of the items that their hard work afforded them, they rarely had TIME to enjoy them to the extent they envisioned when writing the check. 

Tell your kids:  “Time with the people you love is wealth…NOT the toys in the garage or the brand of your clothing”

Borrowing can be a disease that becomes a family epidemic.

From the minute they enter college, there will be a barrage of offers from creditors.  Even the “6 months same as cash” couch that the first apartment needs so bad can cost them more than quadruple what it’s worth.  While some folks have the discipline to pay off credit cards every month, most do not.  We, as a culture, have forgotten the power of accomplishment in paying for things in full…saving to get them, and learning to wait.  How many families suffered from adjustable rate mortgages that allowed for balloons and credit lines that wildly exceeded real values?  It’s all too common now to hear of the family that lost a home and had to start over with horrible credit history and damaged pride!

Tell your kids:  “Almost everything can wait.  With life expectancy nearing 100…you’ve got plenty of time to indulge.  But do so with peace of mind, not the anxiety of mounting bills and climbing interest.  Nothing is more empowering than having no debt and avoiding loans whenever possible.

Future retirement may last as long as actual employment, and health care costs will be ON THE MOON.

With today’s young people entering the “real” workforce around 28, and most still planning on calling it quits by 70…there’s a whole lot of income needed to keep things afloat for nearly 30 years.  The erosion of our buying power due to inflation simply demands that we save far more than we ever have, and an early start makes a huge difference.

$500 per month saved into an investment account ($6,000) per year from age 28 to 70 yields almost $856,000 when earning a mere 5%.  That’s in addition to 401(k) plans, pensions, etc.  Does $500 seem like too much?  How many kids spend nearly that much on smartphone data plans, car payments, and other non-essentials?

Tell your kids:  “The ONLY person you can trust is you.  The greatest corporations in history have reneged on pensions and health care in retirement.  The IRS will be calling on you at higher tax rates to absorb the astronomical debt.  There is nothing cooler than buying your first corvette at 70 instead of being the guy waxing it for the 30 year-old salesman.  Save, save, save, and save some more.”

Leaving a legacy to our children is far more than the dollars that will be left behind, or an heirloom collectible.  Teaching the next generation to empower themselves with financial conservatism and a desire to control their destiny will create the truest and most sought after kind of wealth there is:  Time enjoyed, experiences un-sabotaged by anxiety, marriages that don’t fray due to financial stress. 

So many of us, including myself, can see clearly just how much further ahead we would be without a few wrong turns and a couple impulsive decisions.  Let’s go ahead and love a little tougher, and lead by example…dividends never stop paying.

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