10 Things Your Parents Won’t Tell You

Smart Money lists 10 things your parents won’t tell you . Here are the ones that intrigued me the most: 1) “We’re rich.” Surprise inheritances aren’t uncommon. In a recent U.S. Trust study, 52% of parents with assets of $3 million or more said they haven’t told their children just how wealthy they are, and another 15% haven’t even said told them that they’re well off. Why are they withholding? Most parents think they have plenty of time to talk about money later, and don’t want the knowledge of wealth to be a burden, says Joseph Falanga, the president of the National Association of Estate Planners & Councils. There’s also the fear that kids might become lazy or make bad choices in anticipation of a windfall. Yes, there are many surprises, I’m sure, when kids find out what their parents are worth. And I’m sure it’s on both sides of the equation — some kids are surprised that their parents have so much and some are surprised that their parents have so little. The point above made me think about the kids of the millionaires next door. Because the families live so frugally, I’d bet that most kids will be completely shocked when they find out how much their parents are worth. Key questions for the parents will be how much to leave to the kids (versus giving it away, for example) and when to give it to them. Our current will has the money split between the kids and charities. The kids will get their portions over a decade or so with the last payout being when they are 30. 4) “It’s my fault you’re bad with money.” Parents often do a poor job teaching their kids about finance, say advisers. “If I could wave a magic wand and have one wish, it’d be that parents and kids could sit down and have a candid conversation about money,” says Ted Beck, president for the National Endowment for Financial Education. Kids pick up on parents’ financial actions, but it’s not always clear to them what they should be emulating or avoiding. That has long-term financial consequences. The 2011 National Foundation for Credit Counseling financial literacy survey found that 42% of Americans picked up their money habits from their parents. Yet 56% of those adults do not have a budget, 28% don’t pay their bills on time, 32% don’t save for retirement and 33% don’t save at all. Scarier: more than half would still give themselves an “A” or “B” grade in financial literacy. Ahhhh, the reason most Americans are in such financial hot water — they learned how to manage their finances from their parents. But the parents knew next to nothing about handling money and wanted to buy everything their greedy eyes found “fun.” Hence they spent like drunken sailors to have the latest “everything” and are up in debt to their eyeballs. The kids see how it is done and repeat the cycle. Is it any wonder why the average American has such a poor financial standing? Ok, so maybe I’m exaggerating a bit. But it’s not far from the truth. Parents who know little about managing money (which is most people in the U.S.) do pass along that lack of knowledge to their kids through their examples. The kids see poor financial habits, think they are “normal” and “good”, and practice them themselves. It’s a sad state of affairs. 5) “You’re ruining my retirement…” and 6) “…just like I’m going to ruin yours.” I had to laugh on the combination of these two. Which is worse, kids sucking money from parents for college and post-school support or parents sucking money from kids for retirement and long-term care? Ugh! It’s a mess no matter how you look at it. So what’s the solution? Save for your own retirement and long-term care needs. Help your kids as you can/want with college and later in life. Keep overall spending low and save as much as you can and you should be fine.

View original here:
10 Things Your Parents Won’t Tell You