Kids & Money with Susan O'Brien | E061
Talking to and coaching children to understand money.
In this episode host, Jason Pereira talks with Susan O’Brien Founder and Author of Net Worth Thinking. They especially talk about decisions and discussions surrounding money with smaller kids.
Episode Highlights:
01.35: Susan O’Brien talks about “How she guides families through deep, meaningful conversations.”
01.57: Susan has seen that people want to be independent and want to take care of their families, especially children and grandchildren.
04.00: Susan talks about the importance of educating children about money, like “What is money?” “Where it comes from?”
04.49: As parents or grandparents, we wait too long to discuss money matters with our kids.
06.25: The one thing that Susan found in their consumer society is that kids as young as three are a bit stubborn, and they keep demanding things from their parents. This is something that should be talked about in families.
07.32: If you do a quick search in Amazon, there are great fun books about teaching kids the importance of money.
08.48: Jason talks about the concept of scarcity and rejuvenation of wealth.
09.26: In order to save money, it is about to develop a feeling of abundance.
11.30: Jason enquires as our kid gets older, how does the money talk evolve?
13.56: Personally, Susan found it challenging to implement money-saving tactics daily, but some parents were successful.
14.22: Jason shares a trick that he uses with his son; whatever amount he saves, Jason gives some interest on that. He also shares how one can encourage their kids to share money in charitable causes.
15.01: For Susan the sharing part starts without the money. Taking care of each other is important.
17.47: Jason and Susan talk about what happens when a kid hits a teen or pre-teen.
19.51: Susan shares the importance of keeping conversation non-confrontational.
20.46: Kids, when they grow up, are the same person just entrenched in their habits; you are the same as a parent; you need to be consistent about handling them.
20.53: Jason shifts the topic to when a child reaches late teen level; when they go to universities.
23.20: Susan points out the biggest issue with young people-it is the credit card.
25.29: Jason points out that there are many people who don’t want their kids to suffer as they did. Jason is concerned that it may have an adverse effect and not teach the required respect.
28.10: Susan points out there are so many important things one can teach their kid by not paying their cell phone bills.
29.16: Jason says, “You can’t re-raise your kids, so it is important to plant the tree of value when they are young.”
30.14: It is crucial to think about your legacy? What do you want to achieve? How much money is too much for your kids? How much will hurt them instead help them?
3 Key Points:
Jason and Susan discuss about the youngest age when coaching a child about money should start.
Susan shares instances and tricks from her own experience about “How to encourage your child to save money?”
Kids nowadays are smart, and it’s important to teach them about the world around them and about the needs of other people as well as themselves.
Tweetable Quotes:
“It is important to think that how do I teach my kids to be good stewards of money?” - Susan O’Brien
“Teachable moments come about in everyday life.” - Susan O’Brien
“It takes action to have money, and it also puts a limit to it.” - Jason Pereira
“You need to make money and save it; you got to be careful about spending it.” - Susan O’Brien
“Starting with the end, prepares you to focus on what’s really important for you.” - Susan O’Brien
Resources Mentioned
Susan O’Brien: E-mail: informtaion@networththinking.com | Website
Transcript:
Producer: Welcome to the Financial Planning for Canadian Business Owners podcast. you will hear about industry insights with award-winning financial planner and entrepreneur, Jason Pereira. Through the interviews with different experts with their stories and advice, you will learn how you can navigate the challenges of being an entrepreneur, plan for success and make the most of your business and life. And now your host, Jason Pereira.
Jason Pereira: Hello and welcome. Today on the show I have Susan O'Brien author and founder of Net Worth Thinking. I brought her on the show to specifically talk today about intergenerational wealth. We've covered that topic on a number of occasions, however, this conversation goes a little bit further down the pipe than others in that we're specifically talking about decisions and discussions surrounding money with smaller kids, not your adult children. And she's got some experience in this and I thought it'll be valuable to have the conversation. So here's my interview with Susan.
Jason Pereira: Susan, thanks for taking the time today.
Susan O'Brien: It's wonderful to be here with you, Jason. And today is actually Talk To Kids About Money Day, so it's a perfect day to be talking about money with your children.
Jason Pereira: See, now, if I was better at this, I would have timed it for release on that date, but I'm okay at this. So let's just say it's obvious. Anyway, Susan O'Brien, tell us a little bit about what it is you do.
Susan O'Brien: So what I do is I really prepare people for financial confidence in their retirement and beyond. So, of course, living out their years. And I focus on the entire network of the family, particularly when I talk about family, I'm talking multi-generational families. So I'm part of a four-generation family. I've got my mom, myself, children and even two grandchildren now. So my focus is really on all of those generations. And what I see in people is that they do want to be financially independent and they do want to create enough wealth that they can take care of themselves and their family, but often the most important thing is their children and grandchildren. And those children and grandchildren become good stewards of wealth, to have good money habits, to really learn to be compassionate toward others, to engage in the community around them. And as you mentioned at the very beginning, this starts at a really young age.
Jason Pereira: Absolutely. And this is something I've, since I became a father, became obsessed with. I think particularly working in the financial industry, we all have our horror stories of when it goes terribly awry. And we also get to see the stories of when it goes incredibly well. And I'm sure, on multiple occasions I've had situations where I've actually met the client's kids and been like, "Tell me everything you know about parenting, because that worked out really well," right? And that resonates not just typically to the type of person they are, but oftentimes the money as well. So talk to me first and foremost about how these conversations got started in general in your practice. Like when did this, "Hey, how do I deal with the little kids?" aspect, how did this come about?
Susan O'Brien: Well, it's a gradual process because as you mentioned, you mostly meet with the generation that has accumulated some wealth or is accumulating some wealth. And you're really making sure that they are managing that wealth properly. And if you meet with them in their thirties, they're having children. And so it's so exciting to be at that moment in time when they're having children, and over almost 23 years now, I've seen those children graduate from university and go on to further education. And now they're having children of their own. And so we have this generation that I started with really advising on money matters, and then we have their children and now the grandchildren are coming along. So I've had the privilege, really, having my own children going through this and all the mistakes I made, and there are many, they're all young adults now. And I have a privilege also of having my five-year-old granddaughter live with me.
Susan O'Brien: And she's been living with me since she was about three years old. And so I've been able to see the changes over time between or how grandparents of my mother taught me, how I taught children, and now how parents are teaching their young children. And it's just becoming more apparent that at an earlier age, they're on screens, they're on YouTube. My granddaughter can figure out what the commercial is on YouTube, but she doesn't realize the show is also a commercial trying to sell her something. So three year olds are very astute when it comes to being sold to in a way, or what is money, or that you need money to buy things, or where it comes from. And so I think that as parents and grandparents, we just wait too long to think about, "How do I teach my children to be good stewards of money?".
Jason Pereira: Yeah. And I will say, this is something that probably has to happen a lot earlier than most people think, because frankly I see the bad habits forming before high school, quite honestly, let alone once they get into later on in life. Especially if they're not ready for it by the time they hit university, where they are suddenly responsible for their own spending, and the second they hit campus, it's like, "Hey, want a credit card?". It's brutal, right? They're just not ready for it, and I've seen countless kids have to be bailed out by their parents on countless occasions. So that's how it got started and you saw all this. Let's talk about different age ranges and how you approach it at different age ranges. So what's the youngest that you typically start kind of coaching or telling people to start coaching or having these conversations with children.
Susan O'Brien: Believe it or not, it's three. Three years old.
Jason Pereira: I'm already ahead of schedule. Good to know, okay.
Susan O'Brien: And the teachable moments come about in everyday life, whether you're going to the grocery store or whether you're going to the bank or whether you're using a credit card or different cards. It's just those everyday teachable moments. As well as there's some great books for that three to six year old group, that talks about money and what money is and how you make money. And so there's lots of great resources. So it's money conversations, it's just incorporating with parents and grandparents into everyday life with their children, "Oh, I'm buying this and buying that. This costs this much, " and having those teachable moments. But there's also some good resources out there, like books. The one thing I've found in our consumer society is that kids as young as three are like, "I want that. I want that. I love that. I love them. I want them." It's like they've got a case of the gimmes. So that's, I think, something that needs to be really talked about in families and really put to rest. You just don't need every single toy.
Jason Pereira: After my daughter, her favorite words are, "I want that," "I want you to touch that," or, "I want to eat that." Those are, without failure, that's what she always says.
Susan O'Brien: What age is she?
Jason Pereira: She is three and a half.
Susan O'Brien: Okay. So you're right in the throes.
Jason Pereira: Oh, absolutely. So, you talked about books. So give me some examples. I've got my one go-to, I just want to see if it's on your list.
Susan O'Brien: Yeah. So if you go to my website, networththinking.com, there's a full list of books there. And I did take it from Santander Bank, but we're constantly looking at books for young children. So I really liked the Berenstain Bears. They have different books on-
Jason Pereira:
Yeah, that's mine.
Susan O'Brien: ... Gimmes, making money and that kind of thing. Really kind of fun books. And there's some other ones, Bunny Money. There's Benny's Pennies. If you just do an Amazon search, there are some great books there. Or we read Fancy Nancy books, so Fancy Nancy: Shoe La La talks about wanting a pair of shoes and not having enough money, and then having to do extra chores or work to get the money. So I think probably in any children's series today, there are some really good books about teaching that.
Susan O'Brien: And it's not just the book, right? It is having a conversation around, "Why did Fancy Nancy want those shoes? She didn't really eat them. And what does that mean? And how much does it cost, and what are chores? Should you have an allowance or not? What do you do with your birthday or Christmas money?". So the book is a starting point to a parents and grandparents to have really great discussions about everything that's raised in the book. And not always at the time, because I don't know about your three-year-old, but if we read a book it's not like we're going to have a big discussion after. But we can bring it into different parts of the day, because with a three-year-old they want to read the same book 100 times.
Jason Pereira: Oh, I'm well aware. I'm aware.
Susan O'Brien: A hundred points of little conversations that they can understand.
Jason Pereira: Now, I don't know if you find the same thing. I think that what those have in common, because I've done a couple of those, and it's smart. It's the concepts of scarcity and rejuvenation of wealth. It takes action to have money, and there's a limit to it. And that seems like those are kind of the two like cornerstone lessons to be learned from those. Would you say that's about accurate, or am I missing something in some of the other ones?
Susan O'Brien: I think that your scarcity of money is absolutely true. We know that mental health and financial well-being are tied into all of this, so you need to make money and save money and you've got to be careful about your spending of money. But I think in terms of the spending of money, it's got to come from feeling of abundance. In other words, "I have enough. I am enough. I don't need to have every single toy or fancy pair of shoes that my friends do." So I think that as parents and grandparents, we need to be coming from that feeling that there is an abundance there. And that's a really hard lesson. I haven't figured that one [inaudible 00:09:48] with this age group, those three year olds, four year olds, five year olds, six year olds, but I work on it all the time.
Susan O'Brien: So the gimmes, "Give me this, give me that, I want this toy, I want that toy." And we started cutting out pictures and all the things that she wanted, little four year old, and instead of me saying, "No no, can't have that. Nope, no, you don't need that." That created conflict. So instead say, "Let's look at that." So we cut out all the pictures, and if it wasn't a picture, we drew it, and we made a big list. And we said, "Okay, now on this list, what is the most important thing you want?". And by the time we did all that, it was kind of forgotten that she wanted all those things. So money shouldn't be an area of conflict. So I think we need to set up those conversations and good habits. I also like it that parents and grandparents give books at Christmas and birthdays instead of more toys, and that they give perhaps to Registered Education Savings Plans. You can have a discussion about education and further education, and the cost of education.
Jason Pereira: That's not happening at three, though, right?
Susan O'Brien: Well, the Registered Education Savings Plan is happening, and the book is happening.
Jason Pereira: The conversation about the Registered Education Savings Plan isn't happening at that age, that's for sure.
Susan O'Brien: Yeah, not that. But, "Why didn't Grandma and Grandpa give me a Lego set or a Polly Pocket?". "It's because they really value education, and so they're contributing to school for you." You know, that. So, age appropriate.
Jason Pereira: Excellent. So now that we've discussed tactics with my three-year-old, let's discuss tactics with my six-year-old and talk about as they get older, how does this evolve? I've talked about things like the moon jar on this podcast. I'll share one of my little favorite tactics, it's the scarcity thing. So he's got an ability to earn money by doing some chores around the house. We make sure some of them are included that he has to do them regardless, otherwise he thinks everything comes with a dollar bill attached to it. And one of the actual surprise favorite tactics for this was the Lego flyer that gets mailed to us every month in his name that he loves, but if he wants something on that, he knows he has a scarce amount of money and he's going to have to save. And he's got to have to make trade offs. If he can have that smaller one now, he's going to lose the ability to get that bigger one later. So are those common tactics? Tell me what other tricks and traps and things that you use.
Susan O'Brien: I was just going to congratulate you. That is amazing.
Jason Pereira: Thank you.
Susan O'Brien: That is really amazing, because we have to remember that as parents, we're often kind of overworked, overstressed, over-busy. And we know all the things that you shouldn't be hearing, but they take some time to do that. And you're already helping your son make choices between that instant gratification and maybe delayed gratification. And you're helping teach him that some things you do as part of our family, because you're just part of a family, so there are some chores around the house that you do because you're part of family and you don't get paid. But there are some ways to earn extra money, whatever those may be. And that'll be different in every family, but I think you've hit the nail on the head with a lot of that. That's great.
Jason Pereira: I appreciate that. So let's actually have a conversation around the moon jar concept. Actually, [inaudible 00:13:03] I'm interviewing you, I'm going to explain the concept to our listeners so we can have a discussion around tactics with that. Because I have a few thoughts myself.
Susan O'Brien: Yeah. Well, you start, because I don't use that at all in our practice.
Jason Pereira: Okay, fair enough. So the moon jar is-
Susan O'Brien: [crosstalk 00:13:16] I usually do three. Spending, saving, sharing.
Jason Pereira: That's exactly what it is, right? It's this kind of, "Save, share," facility. So I just call it that because there's a branded version of it that I buy for clients and my kids. So the three jars of spend save, share. There you go.
Susan O'Brien: I think it was a Rockefeller that started that.
Jason Pereira: Really? Interesting.
Susan O'Brien: He was, of course, a big philanthropist and started that three jars of, "There is money and some of it is for spending, and some of it is for saving, and some of it is for sharing or giving." And it's a lovely concept. Personally, I found it hard to implement on a consistent basis, but some parents find it very successful.
Jason Pereira: It's as consistent as the parent. Look, I'll say this much. I think the share part is the harder part. I think, especially when they're younger, but I'll say, I think everything is reinforcement. So the tactics, spending is its own reinforcement. You don't have to be rewarded for spending, but my son has already learned that every week we will look at how much is in his save slot. And I will give him interest, and the interest rate's not fixed, it varies depending on whatever change I want to give him. So he's learning about variable interest rates that way, in effect.
Jason Pereira: And the sharing, which I've encouraged other people to do when their kids get older is, they see commercials for charitable causes or they see things that make them sad, right? So it's like, "You can help. We can give money to people who helped with this sort of thing, but that means sharing the money," right? Like, and then basically help having a conversation around charitable benevolence and helping them to understand that they can do positive things. So that's what I've encouraged people to do. I think six might be a little bit young. Sharing thus far has been framed in terms of sharing with the sister, which depends on how he feels about her that day. But how do you use these jars? What tactics do you use to make the most out of them?
Susan O'Brien: Well, I was going to say the sharing part starts even without money. So just, even as you said, sharing between siblings, but also donating your too-small clothes. Sometimes it's really hard for three, four, five, six year olds to donate anything, even if they don't use it. So I think the whole sharing concept can extend even beyond those money jars, and it can extend to letting go of some possessions to share with others.
Susan O'Brien: I also liked what you said about awareness that you can make a difference in the world, and young children can make a difference in the world. Now it's all about Earth Day and that kind of thing, taking care of our planet, but taking care of each other on our planet is also important. So if they come across something, and you phrased it beautifully, they feel sad about something. Someone doesn't have something, then they can start sharing theirs. So we want to be able to, yes, share our wealth, but share our time, our energy, our clothing that's too small for us. And so I think that to do it with an an awareness of the world around you, again, that starts very young. You know, "Why has someone got a hand out on the street? Why does he have a cardboard sign?".
Jason Pereira: My wife be very happy to hear that her decluttering efforts are considered educational to the kids, so that's valuable.
Susan O'Brien: Have you tried to wrestle some things from them, though that they had from when they were a baby? Like, "You don't play with that toy anymore." They can't give it away.
Jason Pereira: Oh, I know. Well, we've also kind of said, "Hey, the toy room is kind of full. If you expect or want to get anything else in the future, you're going to have to start getting rid of the stuff you don't play with anymore." And inevitably, I think when we empower them to make decisions about what they want to play with and what they don't want to play with, they make those decisions, right? It's like, "Okay, I won't play with this anymore." At least it's on their terms, right? And I think there's something valuable about including them in the conversation there.
Susan O'Brien: And that's a good word, empower, because what we're talking about today, whether you're three, four, five, six, like these young children, or we're talking about teens, or we're talking about adult children or even parents and grandparents, the focus is really on empowering people to own their choices and to understand where those choices are coming from based on their own values and what's important to them. So it really is empowering when you're able to have these little tiny teaching moments, conversations, whatever works in your family and broaden them out as your children are growing so that you're keeping with your family values, passing those on to your children and then empowering them to be good stewards of wealth. So beautiful word, empower. Beautiful word. Absolutely.
Jason Pereira: Absolutely. So that's the littler ones. Let's talk about what happens is they hit the preteens and teens, which I have no firsthand understanding of yet, but talk to me about the transition into those periods where clearly they're becoming more mature, they understand consequences and scarcity and money more freely. So talk to me about how that all works and how you coach around that.
Susan O'Brien: So, they stay the same people. They just get more entrenched in their habits. So in your own family, you might have a real saver, just loves kind of now starting to accumulate money for the accumulation of money, almost. Or you might have a real spender that can't keep any money in their jeans at all. So I think recognizing their money patterns is really important. Often in my own family, typically one child was very happy to spend my money, but not their money. So if we were traveling, for instance, and three other kids were buying ice cream, she wouldn't buy it. And then I'd kind of feel like, "Oh, he's not eating ice cream," and I'd give in and buy him the ice cream, which is not the recommended course of action [inaudible 00:18:53]. What I actually did then was by all the kids the ice cream. So I was spending all my money and they weren't spending theirs. So that was not really the best thing.
Susan O'Brien: But again, it's in your day to day teachable moments. Another time I remember we were going skiing. And so the kids were just under the most expensive age. So they're young teens, and one of them was in the most expensive age to come ski. And they said, "Mom, it's ridiculous that I have to pay this amount. If I was just like six months younger, I could pay this amount." And I'm like, "You do not sell your integrity for $10, $1000, no."
Susan O'Brien: So again, everyday teachable moments. As a parent and a grandparent, I am not perfect. I make a lot of mistakes. I try to learn from those mistakes. I try to keep the conversations, as I said, not confrontational like, "No, can't have that. Nope, don't do that. No, we can't afford those running shoes for you." Rather than framing it, "Okay, there's a lot of needs here. Money is finite. What are the priorities? How are we going to spend our money as a family? What's important to us?".
Susan O'Brien: So kids today, whether they're three, four, five or those teen years, they're smart. They've figured out kind of their family's affluence. They figured out their neighbors', their friends'. What I try to do, though, is what we talked about a little bit earlier, was teach them on awareness of the world around them and the needs of other people, as well as themselves, just to create some compassion. And again, that starts really young too. So they're the same people. They're just more entrenched in their habits. You are the same person as a parent, and you need to be consistent in your handling and your messaging of what's important to them.
Jason Pereira: Excellent. So let's talk about when they move beyond that. Late teens to early twenties, they go into university, pre-work. What's that conversation look like? Because for a lot of them, for most of them, that's their first real taste of freedom and actual responsibility. And let's just say this much, I just remember some of the conversations I had back in the day about people making rent and they're complaining that they can't, but meanwhile, they're at the bar. And it's like, "Oh, really? You need to go to the student food bank. I'm pretty sure he just blew your entire meal budget in the last two weeks." So talk to me about what you do at that stage, if anything.
Susan O'Brien: Absolutely. My youngest client was 16 years old, just a great young woman. And she and her parents had done something right because she had a part-time job, she saved her money and she put it toward her education. But that is an exception rather than the rule, I would say. So what I try to do in my own practice is sit down with the parents, first of all, when kids are in grade 11 or 12. Talk about who's paying for what, what does a budget look like? How much are the kids responsible for in university? How much are the parents responsible for? And then we invite that young person in to see us. And some of them, this is the first time they've come to a big downtown corridor in an elevator and found an office, totally overwhelming. So sometimes they come with their parents, sometimes they come by themselves, and we have a budgeting session.
Susan O'Brien: How much is the university going to cost? What does a budget look like? How much are you going to contribute? How much are your parents going to contribute? If we have the parents' permission, how much money has been set aside for education, what it's invested in, how long it's supposed to last. So having that conversation and then having them actually complete a budget. Now your beer example, the pub example, we know that you can take from one area of your budget to the other, but again, going to finite resources, this is the amount of your budget for the year. And then as a parent, you have to say what happens when they go over that budget.
Susan O'Brien: So my son that I talked about with the ice cream didn't want to spend his money, wanted to spend mine. He's the oldest, so I was the strictest on his budget. And he was running out of his meal plan and was getting hungry toward the end of the university, but he would not come to me to tell me. So when I found this out, I said, "It's okay. We're not born perfect. You don't need to be hungry. I didn't ask if he went into the pub with the extra money or whatever, but I helped him out.
Jason Pereira: One of the areas I want to focus on, so we're talking about how we steward them along the way, let's talk about intervention, right? The kid is clearly having some money spending issues or respect for money issues, however you want to articulate it. They didn't learn the lessons that we're talking about now and maybe the relationship with it is unhealthy. They keep on getting in credit card debt, they keep on putting themselves in trouble. Have you had the experience of having to kind of try to triage the situations? You're nodding yes, good to hear. How have those conversations gone? What are the tactics that have proven effective?
Susan O'Brien: The biggest issue with young people is getting a credit card. By far it is the biggest issue. There should be warning lights around it, "Danger, danger, danger," because they use the credit card but they don't pay it off as soon as a purchase is made. And therefore they have a credit card debt at the end of the month, but they've already spent their budget or their money.
Jason Pereira: Been there. Got myself in that kind of trouble more than once.
Susan O'Brien: Number one way. So I think that as an industry and even in my own practice, we don't do enough about the dangers of credit cards. And I think that when we talk about education and we talked about those maybe teachable moments at any age, it's like, "I am using a credit card, but I'm going to pay it off right away." Or, "I am using a credit card, but I know it comes with a dangerous side, and this is why." So that is the number one issue. I have bailed out, I will admit, bailed out one of my children when they got to the max limit on their credit card. I wouldn't do that again. I really think as a parent, we never want our kids to fail. I don't want them to fail at anything. I want to help them to life, but bailing them out is not necessarily helping them. We should have done, in hindsight, a repayment plan or maybe just letting them negotiate with the credit card.
Jason Pereira: I will agree with that stance altogether. I'm sure I'll be tested on it at some point in the future and we'll see if I stick with the courage of my convictions, but it's one of those things where we grow stronger as human beings through adversity. And I think where I've seen, and where people I know who grew up with a lot of adversity, went wrong with their kids when it came to the money and the respect of it, and they'll openly confess this to me, is they don't want the kids to suffer the way they did or to not have the way they did. And I understand that, but the problem is is that the danger is going too far with that and not teaching them the respect that they need to have for it.
Jason Pereira: And so far to the degree where I even had one of their kids basically say out loud, and I couldn't believe this, it was like, "I never wanted to do this thing that Dad wanted me to do. I wanted to do this." And the response was, "Well, how do you think you're going to support your family off that?". "Well, that's where my parents' money comes in." And it's like, they didn't do all this for you to just basically do nothing with your existence, right? It's fine if that's the way it works out and they're willing to support that, but that's probably not going to make them happy. You're making a bet that they're going to want to support that. Whereas on the opposite end of the spectrum, and I've told this story several times in this podcast, I've had the fortune of dealing with individuals who are members of dynastic fortunes three, four generations deep. And I will tell you universally, I am always thoroughly impressed by the third or fourth generation.
Jason Pereira: And that is that these people are still hungry and they actually look at family wealth as not being theirs. They kind of look at it as this thing that enables the family to give them all the opportunity in the world, and their job is to steward it and add to it, not to simply say, "Eh, well, Mom and Dad's money is going to basically take care of all that. If anything is left for my kids, so be it."
Jason Pereira: And that scenario impresses me so much, and those are some of the people where I've literally said, "Okay, how? How is this possible that you basically accomplished this?". Because it's very easy at certain levels of wealth to just kind of throw it all to the wind and say, "Yeah, we're going to run out for the next two to three generations," if you're that fortunate. But that's not the attitude they take. So hopefully, I think there's something to be learned from those people for all of us. And as for the letting your kids fail, I think what you said there, maybe not fail but, "Hey, you got to pay it back. You legitimately have to pay it back."
Susan O'Brien: [crosstalk 00:27:09] Part of this was paying it back, but it also depends on the child and the lessons they've learned from that. Sometimes we make it too easy for them to pay it back. And then they go [crosstalk 00:27:20].
Jason Pereira: That's the problem. I've had some cases where we've said, "Oh, they got into trouble? That's interesting. So here's the loan document and here's the payment schedule," right? And they're like, "Okay, this is good. I like this idea." The thing is, sometimes you just have to give the parents permission to not just tell them to forget about it. Because they feel that pressure, and as the advisor if you say, "Look, you can do that. Or you can make this a lesson. Not a punitive one, but instead of letting them go get a consolidation loan at 7% or whatever it is," you can borrow from your line at two or three, make them pay the interest and make them stick to a schedule and work it out with them. And I'd say more often than not when someone else is encouraging that and telling them that I can do a positive thing here while not also just wiping it clean, they'll take that option.
Susan O'Brien: No, yeah. I was just thinking, there's so many teachable moments from paying your kid's cell phone bills to not paying your kid's cell phone bills and that kind of thing. And just before that, Jason, you were talking about three or four generations of wealth and maybe the comfort level those parents have, grandparents and great-grandparents have with the family wealth and the idea that it's not mine, it's not my wealth. It's the family's wealth to help educate and give people a hand up, not a handout. And whereas your other example was kids who are just like, "Oh, my mom and dad will take care of it," which is just such a sense of entitlement there. It's like, "I didn't earn it. I didn't make it, but I can spend it." That's probably the difference.
Jason Pereira: But it came from somewhere. And that's the thing, is we know it came from somewhere, it came from reinforced behavior that taught them that for the better part of their lives. And it's like anything else, the best time to plant a tree was 20 years ago. The second best time is right now. And if you want to make sure your kids, unfortunately, sometimes you can't replant the tree when it comes to kids' attitudes. You can't re-raise them. So sometimes the best time to plant the tree when it comes to them is always right right.
Susan O'Brien: And you're shortchanging them, because if they just feel that money comes from Mom and Dad, they're not going to really use their skills and the gifts that they have to make this world a better place. And they're not going to be, as you said, so hungry to go out and really showcase who they are and what they can do. And that feeling of achievement that you get from doing those kinds of things that are important to you, they don't have to because they don't need the money.
Jason Pereira: Yep. Well, it's also the old Warren Buffett saying about, actually he wrote that essay years ago about like the lottery of the womb. And it's like, he's not going to leave a dynastic fortune to his family because it's like, "You didn't earn it. You just got lucky as to who you were born to," right? "You won the lottery of the womb." And as for how much he's going to leave, it's enough that they can do anything, not so much that they can do nothing.
Susan O'Brien: Great conversation in my book, A New Way Forward For Wealth Management: Net Worth Thinking, we start at the end of the beginning. So, what's your legacy? What do you want to achieve? How much money is too much money for your kids? How much you will hurt them rather than help them? So great conversations based on, let's start at the end, not at the beginning and look at legacy.
Jason Pereira: Absolutely. Yeah. And too much of what happens in financial services is geared around the now and the eventual, right? It's like, "Let's get you to that finish line." But the finish line ain't retirement, the finish line is what you leave behind as a legacy. And when you first have the conversation, people are just like, "I don't know." I had this conversation today with a couple who's got more money than they can ever spend, and they have no one to leave it to. And they're just like, "What are we going to do with all this?". I'm like, "Whatever you want."
Susan O'Brien: Right, and what are your passions? What's your purpose?
Jason Pereira: Exactly.
Susan O'Brien: What's important to you?
Jason Pereira: What's the fullest version of your life. And I even said to them, they've given to charity but they haven't anything larger, structural. And I said, "Listen, just give it a thought. You have enough money to basically name a wing of something. A small wing, but you have, you have enough-"
Susan O'Brien: [inaudible 00:31:10].
Jason Pereira: Exactly. So just have a conversation about where you actually want to have an impact in the world. And if the answer is nowhere, fine, but the money is going somewhere. And if it's the kids, if it is kids and you do have them there, great. The money's going there. But as I've said countless times on this podcast with other professionals, is three people get the money. CRA, your heirs, and charity. You can pick two, but the default, CRA always gets what they're going to get. That being said, they can get less if you do charity, but the heirs are usually the second one. But give some thought to that and help figure out what that legacy is anyway. So yeah, starting with the end is a very, very valuable task or a very, very valuable exercise, in my opinion.
Susan O'Brien: Starting at the end focuses you on what's really important to you. And when we're talking about educating three year olds or 13 year olds or 23 year olds, even 32 year olds, it's really based on their values. And so by having that sort of legacy discussion, what's important? What do I value? That just helps you in all those teachable moments. It can remind you about what you're all about, and it's not keeping up with the neighbors or having the best toy room on the block or whatever. It's what's important to you. And it just can stop us from behaviors that are not fitting with who we are as people.
Jason Pereira: So, any final words of wisdom before we sign off today?
Susan O'Brien: My final word of wisdom is, yes, if you want a complete list of children's books do go to my networththinking.com website. I also have a retirement quiz there and a free book offer, so you can go there and get the free book. I would say, also start earlier than whatever age you think you should start educating your children about money matters and make it part of your routine conversations, discussion points, and ensuring always that it is keeping you in line with your own values and family values..
Jason Pereira: Excellent. And where can people find you, Susan?
Susan O'Brien: They can email me at information@networththinking.com. They can go to my website, which is www.networththinking.com. I would love to hear tips and tactics from any parents, grandparents, aunts and uncles that are listening today and love to be able to just share lots of things from my own life and my own mistakes. And I share things that I've learned in working with people for almost 23 years, but I am always open to what works in real life and how to raise responsible children that are good stewards of your wealth for generations. So please, I'd love to get from anybody listening today, info@networththinking.com.
Jason Pereira: Fantastic. Thank you.
Jason Pereira: And that was my interview with Susan O'Brien. I hope you enjoyed that, and if you're a parent, I hope you take some of that to heed. Because frankly, if you're a parent, I'm sure just like me, you worry all the time that you're screwing up. Taking the time to make their minds right about money is actually one of the ways you can make sure that they don't end up screwed up. So as always, if you enjoyed this podcast, give us a review on iTunes, Stitcher, or wherever you listen to your podcasts. And until next time, take care.
Producer: This podcast was brought to you by Woodgate Financial, an award-winning financial planning firm catering to high net worth individuals, business owners and their families. To learn more, go to woodgate.com. You can subscribe to this podcast on Apple Podcasts, Stitcher, Google Play, and Spotify, or find more episodes at jasonpereira.ca. You can even ask Siri, Alexa or Google Home to subscribe for you.