Young people today have very different values from the generations before them, especially with respect to their life’s purpose, goals, and considerations before taking up a job. On top of earning money from their career, young professionals are also excited about chasing their passions, doing what they love and making an impact on the world.
More and more millennials value personal freedom over a regular salary, and are eager to test many waters before locking themselves in on a single source of income. Similar to the generations before us, our children’s view and relationship with money is different from ours. As parents, we have to keep an open mind. After all, what our children value today is what they learned from looking at our habits and life choices. Like us, they keep the values they like and find better ones to match their paths.
However, no matter how things change, many fundamentals about money and life remain the same. And communication is key. Here are some topics I feel are worth it for parents to discuss with their adulting children:
I have two sons, both in their teens now. My husband and I have been exposing them to financial literacy since young, teaching them the importance of saving up, investing what they have, even letting them experience “Bankruptcy”. One time, we gave them their whole month of pocket money to manage on their own. One of them gave in to temptation and bought a mobile phone on impulse. Later, he regretted it as he did not have a single cent to spend for the rest of that month.
Encourage your children to get a job, try managing their own funds, allow them to fail and get up on their own by discovering how to fix their own missteps. Learning early with you by their side is a great and safe way for them to pick up lifelong money management skills.
Today’s digital world provides more alternatives for individuals to earn. Encourage your children to keep their minds open and explore what they like to do. Even computer gaming or make-up tutorials via online videos can be turned into successful side careers today. Converting hobbies into income streams is no longer reserved for stay-at-home moms.
An important lesson that the COVID-19 pandemic has shown many folks, young and old, is the disadvantage of not having alternative sources of income. While a 9-to-5 job can provide stable revenue, that source can be threatened and even disappear overnight. Having more than one source of dependable income gives us more options and therefore, better control over our circumstances.
There is so much managing money can teach us. Even now as adults, we learn every day alongside our children. Our family has an investment plan which involves the children. We park a percentage of their pocket money for a continuous period of 11 months with the hope of getting good returns at the end of the 12th month. Good returns are not always guaranteed. So, learning about stock fundamentals and risks associated with different types of investment choices is part of the learning journey. Instil in your kids to watch for teachable moments and to never stop learning.
When you were younger, did you take certain things about your health and wellness for granted? It is only when the aches and pains from your usual workouts present themselves more regularly that you realise that it’s time to go gentler on yourself. It is only when a sickness takes away your ability to do normal things that you realise how lucky you have been. Health is everything – good health or being free from diseases gives individuals the vitality to work and chase their dreams. Now that your children are on their way to becoming independent, it will serve them well to understand the importance of being physically, mentally, socially and spiritually strong as an essential part of enjoying a fulfilling life.
During my parents’ time, money management was always more about buying what you need, not what you want. It was considered wise to be extremely frugal and save up for rainy days. I have learnt to improvise from there. Having joined the financial services industry, I learned about making money work hard for you using various tools like endowment plans, investment plans etc. Importantly, I also learned the value of ensuring that I have a minimum of six months’ salary in savings for emergencies and to avoid spending more than 50% of my monthly income, among other things.
Emergencies arise unannounced. It’s important that our children know that things always seem to run smoothly because mom and dad work hard to keep it so. By not shielding them from tough news like loss of a job or insufficient funds for vacation, we are showing them that life is not always filled with roses. That is a fact. It is important to always be ready to set aside funds for the hard times so that we can remain safe and comfortable until the storm has passed.
Your children may be alien to the concept of retirement right now, but it is important to be aware that time is always moving. Our ability and capacity to earn a living do not stay the same. But the goal is to be financially free – to not be tied to working forever to support our life but rather to enjoy the lifestyle we want as soon as possible. Be it to retire at age 40 or 60, whatever their ambition is, their lives are theirs to create.
Make an appointment with a financial consultant and get the whole family involved. It is a great opportunity to introduce basic personal financial management skills and to help your children better understand their strengths and weaknesses when it comes to money and how to manage it. When your children get off on the right foot on the art of investing, budgeting, and wealth management, they can be built on this base of knowledge as they journey towards a rich and fulfilling life.
If you are keen on having a complimentary financial planning session for your family, contact me at SG Alliance.
Retirement to me means these three things all at once: • no longer having to work for a living •