Kendall and Bexar County Estate Planning
Texas Estate Planning Blog
Today’s youth already know there is a vast amount of information at their fingertips via the web. Some of today’s young adults are starting to invest very early in their adult and even pre-adult life. Are your children going to be among them?
Sadly --until we as parents insist on changing this-- you cannot count on a public education to prepare your children for financial success. So what can you do? Getting to “ready to invest” really involves your children learning and committing to two prerequisites:
First, your children must be wise to the pitfalls of debt and avoid it. Teach them early that money makes money and debt costs money--lots of it. Have them be clear: they want to be the financier not the financed. Teach your children that with solid self-reliance there is freedom and peace of mind.
Second, before starting to invest your children need to appreciate the need to be prepared for the unexpected. The pandemic has given many of us a personal story to tell. Common wisdom says each of us should have 3 – 6 month cushion for “bad times” when there is potentially no income coming in. Once the reserves are in place that is when money saved can be invested.
Increase Excitement and Desire. Tell your children stories of the success of young entrepreneurs. There are several that are wonderful: Look up Mikaila Ulmer, Noa Mintz, Erik Finman, and Moziah Bridges just to name a few. Once you have your children dreaming and valuing new ideas, innovation and resourcefulness, continue with teaching these things:
Time is on Their Side. There are lots of things to do with your time and several ways to make money: “hard work” is just one of them. Make sure your children understand that money can make money and that a small amount of money saved for a long time can yield more than a large amount saved for a short time. Of course, you want your children to have a strong work ethic but they also need to wonder at what point can their money work for them so they can have more spare time for other important endeavors.
Build Solid Financial Habits. If your children are more focused on putting their money to work they are more likely to place different values on spending the money they earn. Have your children get into the habit of thinking about all the possibilities of what they can do with the money they earn. Some ideas will undoubtably be about short term pleasure: clothes, a car, a vacation, etc but have them contrast that with what they can do with the same sum of money if it grew for 10 -15 years before they spent it…..
Risk Aversion Grows with Age. Few of us are able to have a vision of our whole life while we are young. To the extent you can get your children thinking “longer term” they will have a wonderful head start. Young adults should know that before they have a spouse, some children and a mortgage they will have infinitely more tolerance for risk. That old adage nothing ventured nothing gained needs to be understood in the context of making a plan for one’s whole life. Starting a “nest egg” in their teens and early 20’s can set them up for much greater success, more stability and greater wealth.
Boerne/San Antonio Office
138 Old San Antonio Rd.
Boerne, TX 78006