Latest / Making Cents / Have I Set My Kids Up, or Set Them Back?

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Have I Set My Kids Up, or Set Them Back? · Making Cents

• 0:00
  Most parents want to give their kids a softer landing than they had.
• 0:03
  But what if the soft landing is the problem?
• 0:07
  Day's letter writer has been working really hard to do the right thing by their kids, covering the bills, not stressing the kids out about money, building an investment account for them.
• 0:17
  But right as they're about to fly the nest, they're worried about whether they've actually had the right tactics.
• 0:26
  Maybe they've accidentally raised adults who have no idea how to cope.
• 0:31
  Well, welcome to Ask the Experts, where each week we get someone from inside the money world to answer your questions.
• 0:37
  Get the insider tactics that you need.
• 0:40
  Making Sense has partnered up with EnableMe to get you the strategies for reaching financial freedom faster.
• 0:46
  Head to their website to learn more.
• 0:48
  Visit Enable Me today.
• 0:51
  I want to help as many people as possible build a better life for themselves by understanding and taking control of their money.
• 0:58
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• 1:00
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• 1:06
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• 1:09
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• 1:11
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• 1:16
  Katie Wesley from Enable Me in the hot seat.
• 1:18
  Ready for the letter?
• 1:19
  Ready now.
• 1:20
  All right.
• 1:21
  Hi Frances.
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  My kids are teens that will be flying the nest soon.
• 1:25
  When I'm talking to other parents about uni prep, I'm starting to panic about whether I've actually set them up for the real world.
• 1:32
  I've always wanted them to just be kids, not stressed about money, not working weekends when they should be at parties.
• 1:39
  So we've covered what they need.
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  And I've never really made money a big topic at home.
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  I had planned to give them an allowance while they were still at uni, so they didn't have to worry about anything other than studying.
• 1:52
  I've also been quietly putting money into an investment account for them on birthdays and Christmas.
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  They don't know it exists.
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  I wanted it to be a nice surprise when the time is right, but now I'm worried that when I thought I'd been protecting them, I accidentally left them completely unprepared.
• 2:09
  What do I do?
• 2:10
  Is there still time to change what I'm doing?
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  If I do change, what changes do I make?
• 2:16
  Thanks.
• 2:17
  That line between protecting and overprotecting the kids.
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  Such a hard one.
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  It is such an easy one to.
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  Fall into because you just want the best for them.
• 2:25
  What's your immediate thoughts on the letter?
• 2:27
  I can relate because we all just want to do the best and we're all trying so hard and there's no such thing as perfect.
• 2:35
  But I think there is a real difference between providing a safety net and a hammock for our children.
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  You've gotta understand those differences.
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  Overprotecting children just never serves them in any arena.
• 2:48
  And at home it's a really safe space to get this wrong, to give them more responsibility.
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  And I don't think money should be a focused topic.
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  It's kind of like.
• 3:00
  Should be ambient.
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  It's just something that's there.
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  We've got a plan ourself and a strategy.
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  So money's just not a thing.
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  It's not good or bad.
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  We're in control of it.
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  But knowledge and capability compounds as well as returns.
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  And I think she's doing a little bit of a disservice for them, with them, not to bring them along in the journey.
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  So maybe changing to open up more about what she's doing with money.
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  Everything.
• 3:27
  Everything.
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  Giving them more responsibility in terms of.
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  I'm a strong advocate for giving children an allowance for clothing, et cetera, as early as you can.
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  To take it from experience.
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  They will get it spectacularly wrong.
• 3:42
  But that's a good lesson and much easier.
• 3:46
  Exactly right.
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  To do it then versus when they're out on their own.
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  And it's more impactful in terms of what comes next.
• 3:55
  And I'm a strong advocate for being a really good role model in terms of role modeling what they should be doing going forward.
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  And so I think you start earlier than you think.
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  Stats say that children start learning about money.
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  Concepts from three.
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  Wow.
• 4:11
  Yeah.
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  There's so much in this question.
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  And I know she's doing her best, but we need to bring children into the conversation.
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  I don't think New Zealanders speak enough about money.
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  It's not taboo.
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  And that's part of the work we're doing here is to kind of lift the veil.
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  It's just a hugely pragmatic topic.
• 4:33
  And when you are more knowledgeable, when you're testing things out, that is when you're doing the learning.
• 4:39
  Yeah.
• 4:39
  And I think that idea of.
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  Of not wanting to stress kids about money, I so get where that comes from.
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  But then you, of course, send them off into the real world and like you say, they're going to make mistakes when they're first doing it.
• 4:53
  You surely want them to do that in the home environment when there's a safety net, rather than out in the real world where there's sometimes some pretty Big consequences.
• 5:00
  Absolutely.
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  And how easy it is is it to spend other people's money?
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  It really is.
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  My daughter's 18, just finished her first semester at Otago.
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  Loving it.
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  She's come back a new person because doing it yourself is completely different.
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  She was telling me in the car yesterday she's really excited about next year.
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  She's in the halls this year but she's really excited about next year because her friend is going to drive her car down.
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  So it's going to be amazing.
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  And I'm thinking, oh, amazing, unexpected, formal, blah blah blah.
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  And she said it's just going to be so amazing we'll be able to go to pack and save.
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  And I'm like who are you?
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  Who are you?
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  She's like mom, the food is so much cheaper there.
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  You don't understand.
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  I'm like do, I don't understand.
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  But I, I love that.
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  And you're at the supermarket.
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  She's like, you know mom, you don't have to buy these brands.
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  It just tastes like.
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  I believe I have been telling you that for quite so many years.
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  So it's just very different when they're out there on their own doing the thing and you gotta take those training wheels off and it doesn't have to be a steep cliff, it can be a bit of a ramp.
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  But really important to empower them with all this knowledge, all the things that she is doing and it's amazing to be investing into an account for them but she's kind of robbing them of that journey.
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  Cause that's teaching consistency in terms of a little bit often those compounding returns, those are all really good things to know.
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  You don't necessarily have to tell them the balance or that it's coming when you do X, Y and Z.
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  But take them on the journey, show them what you're doing.
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  A really good tip for my clients is the vast majority they use a day to day spending account for things like groceries, eating out, perpetual money comes in on Monday, if there's nothing left on Friday, they just know
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  where they're at.
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  This is a really good teaching tool for our children in terms of there are limited resources in the world in terms of money, other things we make choices around them and to rob them of that, of all the
• 7:17
  things that we're doing under the surface, it just will not serve them.
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  And even that we account structure, my daughter set that up with the little money that she does have and again just a really good framework to set them up to succeed into the future by watching what you do
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  really important.
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  And I think as well that sometimes, especially teenagers, it can feel like the lessons aren't going in.
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  You know, as you said, she goes off to uni, and all of a sudden, all of these lessons, you've been like, I've been saying this the whole time.
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  Thank you for repeating my words back.
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  They are watching.
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  Yeah.
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  She was like, can I put the points on my card versus your card?
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  And that is so great to be thinking those things and being a bit hustly and what a great thing she's doing to help for children.
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  I just hope that she's put on her gas mask first, because that's really important.
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  And people often say, well, what's the best thing I can do for my kids, Katie?
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  And I always say, please sort yourself out.
• 8:27
  That gives you more ability to help them.
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  But more importantly, you teach them the rules of the game, and they do what you do.
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  Because all those little things that you're saying and that, more importantly what you're doing, they're watching that even if they're eye rolling while they're watching, it is soaking in.
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  And it's really good lessons for them going forward.
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  So they know what to do because it is harder for them, let's be honest.
• 8:50
  And I think often those lessons come back later, whether or not it looks like they're absorbing it at the time.
• 8:55
  It does come back later.
• 8:56
  I remember having a chat to someone who got an inheritance from her.
• 9:00
  Her dad died when she was a young adult, and she felt terrible and that he'd talked to her about money all the way through her teen years, and then he died.
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  She got this inheritance and she just freaked out, went traveling, spent a lot of it, and she felt bad about that, but she then sort of remembered all the things they talked about.
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  And she built back up through her own career, started investing, using all the lessons that he'd taught her.
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  And to me, I was like, I feel like he gave you a gift twice.
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  Absolutely.
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  To go out there, process your grief and see the world.
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  And then you still use the lessons that he gave you, just, you know, on a slight delay.
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  But life happens, right?
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  Absolutely.
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  And that's a tricky thing.
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  You learn more from what goes wrong than what goes right, you know?
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  And I think all of us as parents, we want our children to be good people, to contribute, to be, you know, fulfilled in their lives.
• 9:56
  And this is part of the armory or toolkit in terms of what comes next.
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  She talked about the allowance as well.
• 10:04
  I think that is useful to a point, but keep it Lean.
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  And you've got to make sure that works with your own numbers because eyes wide open again, you got to make it hard for them a little bit.
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  You can't make it too easy, otherwise you do not understand the value of money and the value of hard work.
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  It's hard, but you get so much out of reaping your rewards, knowing you can do it.
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  Absolutely.
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  Absolutely.
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  So don't rob them too much.
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  And what is it I heard recently there's a saying that, you know, inherited wealth never reaches grandchildren.
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  It generally gets spent in that next generation.
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  Easy come, easy go.
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  So I think that again, financial capability and knowledge, it does compound not just the thing that you're giving.
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  Not so fun fact.
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  When you take on a 30 year mortgage, you'll probably pay more than double what you originally borrowed because of the cost of interest.
• 11:06
  That's probably not the Kiwi dream.
• 11:08
  You bought into the team at EnableMe.
• 11:11
  Specialise in taking charge of your money and growing your wealth, including how to get rid of your mortgage faster.
• 11:18
  Book a consultation with an EnableMe financial advisor today by visiting enable.com not me.
• 11:24
  And it sounds really trite and I don't mean this in a sort of hustle grow way, but if I genuinely could only choose between giving my kids knowledge or giving them money.
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  I mean, ideally, of course, it's lovely to give them both, but I would pick knowledge because money can be spent and blown any amount of it if they don't know what to do with it.
• 11:41
  If they get the knowledge from working with you and seeing how these things work, I think that's so much more powerful.
• 11:48
  And I want to pick up on something you said about that of like investing in yourself, putting your own, you know, your own safety mask on first.
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  Don't over give.
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  And particularly when I see females, that is the inclination is to over give and to be so generous, but actually that generosity starts with yourself and you can't pour from an empty cup.
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  And like perversely, if you over give, they're gonna have to look after you when you are older and you haven't set yourself up.
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  So that is really important.
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  That is not selfish and that's really important.
• 12:28
  Being good with money, that is just sensible and it's what we all should be doing and that's what we're role modeling for our children and that is what we're role modeling for our daughters.
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  I am very clear on that.
• 12:39
  Yes, I love that so much.
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  And I also think, you know when you said about the role modeling and living by example I mean, how many parents know this?
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  In all areas of raising kids, they don't do what you say, they do what you do.
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  It's really annoying.
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  It really is.
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  And they also sniff hypocrisy.
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  My 16 year old son, he will call me out and terrible when they do that.
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  And they're so right when they do it.
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  So right.
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  Yeah, so annoying.
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  But that is good because it's keeping us on our toes and it means they're smart and they have a brain for themselves and we're all trying our best.
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  There's no perfect answer to any of this, but in them, seeing you fail, that's important too, because that's teaching them that it's not the end of the world.
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  You just dust yourself off and you learn the lessons and you do something else that's really important.
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  And money fits into that category.
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  You invested in this, it didn't work out.
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  Oh, well, what will you do next?
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  And it's always, you know, we're looking forward and the shadows fall behind us.
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  Super important.
• 13:44
  Well, that makes me think of another line in the letter when she was saying, you know, I really just want to let kids be kids and I don't want to stress them out.
• 13:49
  And I get that, I really, really do.
• 13:54
  But I think you can talk to people about some of the tough lessons with money without hopefully stressing kids out too much.
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  What would your line be?
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  And sort of the tone of money conversations maybe different at different ages.
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  I don't know, it's just.
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  Don't make it a thing.
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  It is just a tool.
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  It's just another tool that you're using.
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  And you've got to acknowledge in reading between the lines, you've got your own money story that you are telling yourself and how you operate.
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  And who's to say money is scary?
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  I think the unknown is scary.
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  And you might accidentally be kind of putting your stuff on them in terms of not talking about it openly.
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  Because remember, it's just a tool and you can use it really wisely so that it's not a thing in going forward.
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  So an important balance.
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  But again, gotta make sure that you're not reflecting back your story, which may not have served you particularly well to this point.
• 14:55
  That's such a good point that we might be projecting our own issues onto our conversations with our kids, which again, very likely.
• 15:02
  Yeah, often the case.
• 15:04
  Which again is another great point for learning about money and dealing with your own issues.
• 15:09
  Absolutely.
• 15:11
  Yeah.
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  Another thing that she was talking about was the allowance issue and I think obviously uni can be quite hard, you are quite broke.
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  There can be a good argument for support if you can give it at the same time.
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  I remember certainly when I was at uni, all of the people who went on to like good full time jobs after graduation had built up networks and skills through part time jobs while they were at uni, often ideally
• 15:38
  in their own field.
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  And I think it can be.
• 15:40
  Of course that's a hard thing to do and it takes a lot of time and you're balancing a lot.
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  But I kind of feel like if I had an allowance I probably wouldn't have done it and that would have been bad for my career.
• 15:52
  100%.
• 15:52
  I think work experience is the thing that actually gets you the job after university.
• 15:57
  It's teaching you such good lessons to show up to do the boring thing anyway.
• 16:02
  The value of a dollar, et cetera.
• 16:04
  An allowance can be useful, but keep it, keep it lean and also if you are giving them allowance, get them to tell you what they think it should be because they're going to have to research that.
• 16:14
  And again, that's a really good tool.
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  Not to say that you're going to agree with them, but it's a good starting point in terms of what comes next.
• 16:21
  And keep it lean and make sure that you can afford it.
• 16:24
  Yes, yes, exactly.
• 16:26
  I think exactly as you say, it is not selfish.
• 16:28
  Look after yourself first.
• 16:29
  It's actually a beautiful gift to give your kids, demonstrate that looking after yourself is good and then your kids will hopefully pick that up too.
• 16:38
  Absolutely.
• 16:39
  So if they're wanting to course correct and put some of this into action, it may or may not go down well with the kids at first because they probably got quite a good thing going at the moment.
• 16:50
  It might be a tough course correction.
• 16:51
  Ignorance is bliss.
• 16:52
  Yeah, exactly.
• 16:54
  So where would they start on a bit of a course correction here?
• 16:58
  Onto some of the things we've talked about.
• 16:59
  Start with a conversation, talk about university, understand, even unpacking what the course costs, what the halls cost.
• 17:06
  It's very eye opening to the children as well in terms of even planting the seed of.
• 17:13
  Do they really want to do this because it's more expensive than it ever has been.
• 17:19
  And understanding the numbers around that is again just a really good life lesson, I think in my daughter's halls.
• 17:26
  20,000 course I think is 8,000.
• 17:30
  Yeah.
• 17:31
  And it's really interesting as well.
• 17:32
  They've done lots of research and if they pay for a bit of it themselves, they generally do better from a grading perspective as well.
• 17:42
  That whole skin in the game.
• 17:44
  So again, you're just taking them on the journey.
• 17:47
  Start with a conversation, don't make it a huge deal.
• 17:51
  It's like, right, sit down, we're about to talk about money.
• 17:55
  That's not it.
• 17:56
  It's actually you just opening up, being really honest.
• 18:00
  I think a good place to start for the elders is certainly about this journey that they want to go on, to understand the consequences and the different paths that are available.
• 18:08
  Because it's not just one right path, but understanding consequences.
• 18:12
  Super important.
• 18:13
  I love that.
• 18:14
  That's such good advice.
• 18:15
  Thank you so much.
• 18:15
  Katie Wesley from Enable Me now, of course, this episode all about answering your questions.
• 18:20
  If you have more, send them to us.
• 18:22
  We'll do a deep dive for you.
• 18:24
  Askancescook Co NZ is the email to send them through to.
• 18:28
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• 18:30
  We can all level up our money together.
• 18:32
  Until next time, have a great day.
• 18:35
  This podcast can only give you general information about how things work in most situations.
• 18:41
  It's not individual financial advice.
• 18:43
  If you're after that, a financial advisor is always the best bet.