Wednesday, March 23, 2016

Financial parenting

I finally read The Millionaire Next Door, a standard inclusion on the bookshelf of any personal finance library.  The main message in that book is that true millionaires don't "look" like millionaires; they live more frugally than their neighbors.  Not necessarily as frugally as me, mind you, but definitely not drawn to flashy cars, giant houses, fancy clothes, etc.

Two things I hadn't expected from the book from what I've heard about it elsewhere were
  1. sexism.  I mean, what the heck is up with the authors' repeated assertion that "the average millionaire is a man married to the same (frugal) woman for many years."  Um, doesn't that mean the woman is a millionaire, too?  Hello?
  2. parenting lessons.
The parenting lessons are basically these:  the more that parents "help" their adult children financially, the worse off those adult children are at accumulating wealth.  In fact, financial assistance to adult children seems to lead to more financial unhappiness than it does to stability.  For example (the authors note), parents who help their kids buy a home in a nice neighborhood are inadvertently setting their offspring up for a lifestyle where they have to "keep up" materially with higher income neighbors.  Grandparents who pay for their grandchildren's private schooling implicitly require that the parents then feel pressured to pay for clothing, sports teams, technology (etc) to match the other children whose parents can more easily afford kid bling.  And adult children who start receiving financial gifts from their parents come to expect, rely upon, and feel entitled to continuing installments of that income.  

All of this makes me feel better that I don't regularly channel money to my grown kids.  (By "all of this", I mean "all of the financial parenting lessons"; I don't mean the absurd notion that stay-at-home wives aren't also millionaires.  I mean, geez, the authors' whole contention is that it's saving money, not earning money, that makes a millionaire.  So the whole ignore-the-wives aspect of this book really irked me.  Can you tell?)

Okay, so I don't shovel money in the direction of my kids.  But that doesn't mean I'm totally hands-off, either.  Here are some things that I give my adult children in the hopes that they can become financially stable and comfortable on their own.

  1. A good example.  Or, possibly, an extreme example that they can gently draw back from in their own lives.  I love that my oldest daughter is gardening, that several of my daughters use canning jars, that all of my offspring like walking places. 
  2. Lessons in filling out stupid (but important) paperwork.  All of my kids started filling out their own school info forms when they turned about 8 years old, at first with lots of guidance from me, and later increasingly on their own.  I had my young kids "help" me fill out my tax forms by reading me W2 form numbers.  I sat near K-daughter while she filled out FAFSA forms the first time, and helped her create a file of important paperwork.  
  3. Gifts that are investments in the future, not lifestyle enhancers.  We've never given a kid a car, but we've given most of them bicycles.  We've never given a kid a computer, but we've given all the adults sewing machines.  Our most recent big gift was setting up a 529 plan for my granddaughter. . . that's as close as I've gotten to giving a child of mine actual money.  
  4. A calm, non-anxious presence.  Yes, I'll go with you when you visit houses you might want to buy.  Yes, I'll walk into the bank with you as we set up your checking account. Yes, I'll sit with you while you navigate the HealthCare Marketplace.   You'd be fine on your own, but I'll be there anyway. 
  5. Suggesting advice, and then backing off if the kids aren't ready.  Even when I want to scream "GAAAH!!! SELL THE HOUSE NOW!" or "FINISH COLLEGE!!!", I try my best to remain neutral.  ("Darling, if you need help contacting a realtor, just let me know."  "So, have you looked into applying to colleges next year?  No?  Okay, well, if you do and you need help, just ask.") Butting out is seriously hard.   
  6. Occasional unsolicited advice that actually goes somewhere.  I've been talking with K-daughter recently about myRAs and IRAs, which are things she's interested in but not actively pursuing.  I've had similar conversations with our host daughter, Y, who I've begun to realize has had not-a-lot of practical wisdom passed along from her own parents.  (That's another story.)  Every once in a while, it seems, I say something that my kids actually decide makes sense.  It's okay with me that it's only every once in a while.
  7. Advice when asked.  I tell my colleagues, "When it comes to advice, I'm full of it".  I try hard (and probably don't entirely succeed) in not being pushy with my kids, so that they can feel free to come ask me questions.   I think two of the biggest compliments I've gotten were (1) when my homemade daughter told me, "Mom, you're so . . . useful", and (2) this texting exchange between me and K-daughter:

Me: Oh, good! Glad it worked! I love it when you ask for advice, even when I don't have a good answer! Love. 
K-daughter: Haha thanks :) I love when you do have answers but I love it more when you make me figure it out myself. 

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