Money Minded Families. Stephanie W. Mackara

helps him build the foundation of a successful and healthy relationship with his own finances and in his life.

      This is not to judge my parents' parenting. As parents, we are all often just treading water, doing the very best we can. But I do think we need to pay attention, listen closely, and be present when it comes to talking about money and finances. Our kids so desperately need guidance. I encourage you not to underestimate the people and lessons in your children's lives and the permanent impact they can have on their financial behaviors, attitudes, and overall wellbeing. I was fortunate to have close friends throughout high school and college who were taught basic financial concepts and did offer guidance that intrigued me—so much so that I wanted to learn and understand more about how best to earn, invest, and spend money. Maybe this is what led me to my current profession as a financial advisor.

      As parents, we must prioritize teaching our children smart financial habits while attributing positive connections with money. Today's technological landscape has made teaching kids about money increasingly difficult. Consider that the way most of us were introduced to money was with actual dollars in hand. We walked into a store, picked out what we wanted, and had to figure out how many of those dollars to hand over. Today, children have gift cards, online shopping, and apps for purchases and as a result they can go years without ever really handling money other than play money from that toy cash register.

      We so often hear the word “entitled” to describe kids today. I personally think the word is overused and incorrectly applied, except when it comes to the expectations children have about getting things—then it's right on point. The question is: Why do our kids feel so entitled? Why do they feel as though they have the right to simply “get” everything they want simply because they want it?

The answer is that the culture we live in, and many of us, have fed into this environment of instant gratification for our children, and unless we figure out how to break the cycle of expectation, we will set our kids up for failure as adults, particularly when it comes to their becoming financially independent and successful. So, let's stop blaming our kids for their sense of entitlement and do something about it. Melinda Gates, who has more money than most of us can ever dream of, recently said about raising her children that she could never say “No, you can't have that item because we can't afford it”; what she did instead was help her children understand that just because you can afford something doesn't mean that you should buy it.

      When I was in college, only a lucky few had parents who paid for all their college costs and expenses. Today, for many, parents paying for college is an expectation. In fact, not only are we paying, but we start planning for these costs when our kids are right out of the womb. Many people save more for their children's college than their own retirement. I'm not suggesting we shouldn't plan for our children's future. Bernie and I are in fact saving aggressively for my son's college education. As a mom, like most, I want the best possible future for my son, and I know a college degree will push him toward his future earning potential. However, we want him to understand the value of that degree, our expectations of him, as well as the cost of each class and each missed class. We try hard to reinforce that we will help him because, through his hard work in school and sports, and as a good friend and community contributor, he has earned our support; there is no free lunch. Earned is the operative word.

      When I think of the struggles of raising children to be financially competent adults, I think of the Chinese proverb: “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.”

      Feeding all of your child's financial wants day in and day out can create a cycle of dependency and a lack of resourcefulness on the part of your child. I hope after reading this book you can teach your children how to feed their own financial needs and wants and ultimately set them on a successful path toward their own financial wellbeing. I also hope this book will help adults who may not have a healthy relationship with money to reflect on the reasons behind their own financial habits and begin to live a life of financial wellness.

      I'd like this book to be used as a tool to help you guide your children, and to be shared with your children. The goal is to help raise strong, educated people who have the know-how and desire to set and achieve financial goals for themselves, save and spend with clarity, and understand the value and purpose of their work and of material things. We do this by understanding and perhaps redefining our own money personalities and working to create positive financial socialization for our children.

What this book is not is a prescription telling you exactly what to do. I firmly believe there is no one way to parent and particularly to help children engage with money in a positive way. Each family and each child within the family is unique. My hope is that you and your family will find the path that works best for you. Throughout this book you'll find lots of studies, data, and numbers (it is a book on finance after all), but perhaps even more importantly, you'll find examples of how to talk to your children about money and why these conversations are crucial to their financial wellbeing. I'm sharing not only lessons I've learned from my career in finance, but my own money mistakes and lessons learned so you can teach your sons and daughters how to “fish” and become financially prepared for adult life.

      Journalist Sydney J. Harris made the brilliant analogy that “the whole purpose of education is to turn mirrors into windows. When you gaze into a mirror, the only things you see are your reflection and a limited area around you. However, when you look out a window, the view can be almost endless.” Helping educate yourself and your children about their behaviors toward finance will, without a doubt, have a dramatic change on their view of money, seeing it as a tool offering endless possibilities and helping to enrich their quality of life as it relates to their financial wellbeing.

1 Background: A Little Bit of “Retirement” History

      Developing a healthy relationship with money and finances is a lifelong journey. That journey starts at young toddler age, extends throughout your entire life, and has ramifications at each step, all the way to the handling and distribution of your estate after you are deceased. Yet in this country we are generally fixated on one and only one step or destination, rather than on the journey. That destination is what we have labeled retirement. In this book, my goal is to give you and your family tools to manage your finances and goals throughout the journey, with the understanding that our children are being raised in a very different time, one in which “retirement” must be redefined or simply dismissed as the “goal.” I thought it prudent to provide a quick history of how retirement came to be and how it must change for future generations.

      In the late 1800s, when the concept of retirement as a government policy was adopted first in Germany under Otto Von Bismarck, “retirement” at that time had a very different meaning. Bismarck introduced the idea of retirement as a modern government pension, a financial benefit for workers once they reached the age of 70 and most could no longer perform physical work. Before this concept, if you lived, you worked; there was no stopping or retiring from one's job. Otto wasn't motivated by compassion for the plight of the working class, but rather wanted to preempt a growing socialist movement in Germany before it grew any more powerful, and therefore provide the people of Germany with financial support, something they couldn't manage on their own and would keep the people happy with his leadership. This new pension provided government financial support to the aging population in Germany and was the first time in history people began to plan to retire (Source: https://www.theatlantic.com/business/archive/2014/10/how-retirement-was-invented/381802/).

This idea of working to live quickly changed and people across the globe became enamored with the idea that they could stop working at a certain age, and with the financial support of the government live out their last few years of life taking it easy. As evidenced by the labor force participation rates, “retirement” as we know it today is a twentieth-century phenomenon. People in the late 1800s and early 1900s had shorter life expectancies and typically ran their family farms for most of their adult lives. The rich managed their estates. No matter their status, most continued to work until they died. Consider