“Teach Your Children to Fish”

“Teach Your  Children to Fish” 

Robert A. Caldwell, CPA 

Fishing is surely one of life’s greatest pastimes! While polo is called the sport of kings, fishing is a sport for everyone, for it is said, “All men (and women) are equal before fish.”  Fishing can teach us many valuable life lessons, the chief ones probably being patience and humility. The ritual of fishing is as old as cold water, so what can we learn from it? Well, the following quotation comes to mind:  “If you want to feed someone for a day, give them a fish. If you want to feed someone for their lifetime, teach them to fish.”

We talk all the time about “raising children,” but  we are really raising  adults. Childhood lasts only 20% of our lives, so your children will spend most of their time as adults. One of the greatest gifts you can give your children is financial independence. Teaching your children to fish is what financial independence is all about.
More and more parents are continuing to regularly financially support or subsidize their grown children. Sometimes the support comes from grandparents. As a financial advisor and money counselor, this trend disturbs me deeply. It indicates that we are training a generation of adult children in financial dependence rather than independence.  Now please understand me. I am  most certainly NOT saying that you shouldn’t help your grown children or grandchildren from time to time. We all need help in time of need. This is especially true of struggling single parents, the unemployed, and those households experiencing illness or extraordinary financial pressures.  However, our society is seeing a growing trend of adult children depending on monthly parental financial support. Often they are well educated, with good paying jobs. I recall the instance of one client, a widow whose income was less than $25,000 a year. She was paying the monthly utility, telephone, cell phone, and cable bills for her college graduate daughter whose annual salary was over $60,000. What message is this sending younger generations? What problems can this cause?

First of all, it teaches adult children to live above their means. This creates a false sense of security, and can lead to serious financial troubles if the parental support suddenly ends.  In order to meet continuing financial obligations, many people will feel forced to borrow, often using credit cards and paying ruinous interest rates.
Secondly, when adult children continue to be supported by parents, they remain dependent and can never reach their full potential. There is a great personal satisfaction  that comes from fully paying one’s own way. The financial shift from dependence to independence is also crucial if parents are to accept  their offspring  as “real” adults.

Third, when a married couple receives regular financial support from one or more sets of parents, there is a definite barrier to emotional intimacy. Money issues cause more problems in marriage than any other issues. Dependence on parents affects how spouses see themselves and their mates. The stream of monetary payments remain as an invisible “umbilical cord” that continues to connect parents to child.  In order for a couple to have a healthy marriage, that cord must be firmly cut.
So what are parents to do? We love our children and want to help them! Nothing could be more natural. In the Gospel of  Luke, we read: “If a son asks for bread from any father among you, will he give him a stone?  Or if he asks for a fish , will he give him a serpent instead of a fish? Or if  he asks for an  egg, will he offer him a scorpion?”(Luke 11:11, 12, NKJV).  In spite of our very best intentions, financial support that creates dependency in our children can turn out to be a serpent that poisons their lives and relationships. Surely there is a better way!

A healthy way to render financial assistance to adult children focuses on what I call “safety net” issues. Rather than making payments for current living expenses, consider making investments in your adult children’s financial future. This could include contributions to retirement plans and IRAs, educational savings plans (529 plans), life and disability insurance premiums, etc. Another way to help with safety net issues is paying for educational expenses. Throughout my childhood and adolescence, my father drilled into my hard little head that “An education is something that no one can ever take away from you.” That wise counsel brings to mind a prominent and successful businessman in our city. He is an acknowledged leader in his profession and very successful. What many don’t know is that before achieving his present great success, he went bankrupt in two other businesses. His education, along with his drive and character, enabled him to recover and prosper.
Begin early guiding your children on the path of financial independence. It may very well be one of the most valuable gifts that you can give them.