Our kids are like sponges: they absorb what we do and mimic our behavior. For any of us who have heard our mom or dad’s ‘voice’ come out of our mouth, we know that kids learn by watching us.
Our money beliefs are formed at an early age and have a lasting impact on our relationship with money. We are unduly influenced by our behavioral biases around money.
When it comes to money and investing, a common thread among virtually everyone is: “We wish we knew more sooner… we waited too long to get started.” Compounding is the secret to successful investing and the key is TIME invested rather than timing of investments.
Beyond starting early, the most important life skill we can equip our kids with is having a healthy financial relationship with money. Money is a valuable tool. It impacts everyone’s life and is with us all the time. We cannot opt out. Regardless of our underlying feelings and anxieties around money, we deal with and operate around money every day. A major cause of stress revolves around money, often because we are unprepared for the responsibility or have a lack of financial knowledge.
How Can We Help The Next Generation?
• Things you did well and could have done better.
• Your successes and missteps.
• Messages you heard growing up.
Provide Opportunities For Hands On Learning
As our kids mature into teens and young adults, we can continue to have a significant impact on their money blueprint by providing a hands-on approach to learning.
If you have a teenager, the new Fidelity® Youth Account is a great way to expose our next generation.
• Open a brokerage account for your teens (age 13-17).
• Instill financial literacy at an early age.
• Access to learning center for more education.
• No account fees.
Encourage Learning Experiences Early & Often
Nobody wakes up one day and knows what to do. We learn best by doing… and by making mistakes. One of the toughest lessons is to understand tradeoffs: risk vs. reward, immediate vs. delayed gratification. The earlier we learn, the more impactful it is on our money blueprint.
Instill Financial Confidence
One of the greatest gifts we can give our next generation is to demystify finances and money. It’s even more important than financial literacy. We gain confidence by doing, and more experience leads to a higher level of comfort and knowledge.
Teach Sons & Daughters Equitably
Parents often talk differently about money to their sons and daughters. What are parents more likely to talk to daughters about? How to open checking accounts. Budget and track spending. Saving and budgeting. Sons? How to build credit. Manage taxes. How to invest. This disparity has lifelong consequences. Women have been found to invest less and later than men. This is even more disturbing since women often live longer and need their assets to last.
Start planting the seeds today. We all want our next generation to flourish. The earlier we learn the rewards of having a healthy relationship with money, the better prepared we are for whatever life offers.
Life’s a journey… ENJOY!
To living your ideal life,
The Paradigm Team
Paradigm Advisors is a fee-only financial planning firm based in Dallas, Texas and Fayetteville, Arkansas. Paradigm Advisors provides comprehensive financial planning and investment management services to help clients organize, grow and protect their wealth throughout life’s journey. Paradigm specializes in advising well-established career executives through financial planning and investment management. As a fee-only fiduciary and independent financial advisor, Paradigm never receives commission of any kind. Paradigm is legally bound by certification to provide unbiased and trustworthy financial advice.