Are You Stopping Your Kids Shoveling Horse Poop?
When your friend says something interesting, write it down. Better yet, post it online and give your friend eternal life.
I was whining to Debbie V, one of my dearest friends, over a creamy risotto I was savoring at a plush London restaurant she had taken me to as a birthday treat, when she reminded me to shut up and be happy.
Debbie didn’t even look up when she said it.
She just mumbled, ‘You may be shoveling horse manure but at least you’re in the parade,’ while trying to decide whether to sip her sauvignon blanc or take another bite of her smoked duck.
Deb’s words took me back to all the roles I’ve played in my life so far, all the “jobs” I did as a student to make money, from telesales to horse sales (that was pretty close to actually shoveling the steaming mounds) and many weird and wonderful things in between; to the tasks I’ve taken on in my career and business and to create assets, like learning how to make lead-light windows, days and weeks with paint splatter in my hair and endless nights sanding tongue and groove walls as I renovated various houses. Many of those experiences were less than glamorous.
I may have been shoveling horse doo-do but at least I was in the parade.
We also giggled about a mutual friend of ours who feels the great tragedy of his life was that he inherited 16 million pounds.
The way he tells it, he’s never really recovered from that horrible day.
He used to moan about it until she finally said, “Shut up, you crybaby. Maybe we should take part of that cash and buy you a spine. And then maybe we can hire an old woman to knit you a pair.”
Strangely, he absolutely adores her for that verbal slap.
I actually kind of agree with him: it would be truly horrible to wake up one day and learn that nothing in life required your effort anymore; all you had to do is point and it would be handed to you.
Many people believe that if they could just do this for their kids, if they could set their kids up financially so they didn’t have to work so hard or ever do without, they would really be showing them how much they love them.
So – does providing your child, especially your adult child, with financial help, help or hinder them?
The authors of “The Millionaire Next Door” answered that question.
They call this financial support “economic outpatient care”: parents giving financial gifts to their adult children.
Let’s take a look at the impact of providing economic outpatient care to your children.
The first thing to keep in mind is that very few financially free individuals received any economic outpatient care from their parents.
They were “self-made”.
They worked hard, spent little, saved, invested and mastered the recipes for wealth.
The authors discovered, the more money adult children receive from their parents, the less likely they are to accumulate wealth themselves.
The inverse is also true. The less money adult children receive from their parents, the more likely they are to accumulate wealth. That seems to be a strange phenomenon but look at why that is.
There are four reasons gift receivers are less likely to accumulate wealth than non-receivers.
- Giving causes more consumption than saving and investing.
The perfect example of this is when parents give their adult children money for a down payment on a home.
It will often cause the children to purchase a home in a neighborhood that is way to affluent for their income. The problem is that it causes extra living expenses to try and keep up with the neighbors. - Most gift receivers have a hard time distinguishing between their wealth and that of their parents.
They often view their parents' wealth as extra income. The Bank of Mum and Dad!
This isn’t just viewed as extra income, it is usually perceived as having less value than their own income and so it is seen as money to spend.
This is the same phenomena with credit cards and debt.
After all, it is much easier to spend other people’s money. The sad part is they become dependent on that money to sustain their lifestyle and end up in deep trouble when the plug is pulled on the gifts. - Gift receivers are significantly more likely to live on credit and have a high amount of debt.
This is not a way to become financially free.
The receivers of economic outpatient care often use credit as a way to finance their lifestyle in between cash gifts from their parents.
Again, they cannot afford the lifestyle on their own, so they have to go into debt to sustain it. - Receivers of gifts invest much less money than non-receivers.
In fact, gift receivers invest 65% less than non-receivers.
It is due to their high consumption lifestyle. When their money is being spent on things, there is none left to invest.
Scary stuff!
You may be asking how a parent can be a blessing to their adult children.
“The greatest gift you can give your kid is financial freedom, not theirs, but yours”
First and foremost… make sure you have your wealth pots sorted and give your kids the gift of knowing they will never have to look after you financially.
Secondly, teach them how to keep some of all they receive, how to save for the things they want and how to put money to work by investing it.
If they become used to a high consumption lifestyle as a youngster, if all they know is, point and get it, money in – money out; they are going to crave that same lifestyle when they are supposed to be starting out on their own.
Thirdly, teach your children to be independent and responsible.
That means not stepping in and doing everything for them. Let them live and learn. Let them shovel horse manure. If you want to help them financially, pay for their education or provide seed money to start or enhance a business, but only after you have sorted your wealth out first.
The bottom line is that it takes courage to accumulate wealth and become financially free. It takes discipline and the ability to focus on longer term goals. It takes courage to swim against the tide of consumerism.
When a parent tries to insulate their children from any failure or pain, it squelches any courage they may have. If you want to help your children and be a blessing in their life, coach them how to be successful and then let them shovel horse manure!
What horse manure shoveling have you done lately?
Huge Love,
Ann
