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Erik Sussman: Are We Creating a Financially Irresponsible Generation?

You may be surprised to learn that personal spending and post-pandemic “revenge shopping” in the U.S. are at historic highs.

At the same time, Americans are reporting they don’t expect their financial situations to improve in 2022. With this being National Financial Literacy month, now is a good time to ask ourselves: How will our actions impact current and future generations? And, notably: Are we creating a generation of financially irresponsible youths?

Florida Gov. Ron DeSantis’ financial literacy bill requiring high school students to complete a financial literacy course to receive a standard high school diploma is a step in the right direction. Hopefully, Florida’s action will motivate other states to follow suit. However, unfortunately, our current education system still lacks what’s really needed: a formal financial education curriculum. And that can only do so much, as the examples set daily by parents and guardians at home are far more powerful in shaping our youths’ attitudes toward money.

How can we can be better role models for our youth? Studies continue to show personal spending increasing while personal savings continues to drop.

Concepts—as basic as purchasing appreciating assets over depreciating assets, not using high-interest credit cards to “keep up with the Jones’s,” sticking to a budget that includes “paying yourself first” so you build your assets and creating short-, mid-, and long-term goals, while utilizing the proper financial vehicles—are critical to understand so you put yourself in a solid financial position.

From personal experience, I have seen the impact that a proper financial education along with building good financial habits can have on people.

We first must ask our ourselves if we have our own financial houses in order. Once we can check that box, then we can take the time to demonstrate through actions, education and behavior, how to become solid role models and teachers to our children.

Some Questions to Consider

Do you talk to your children about money? Are they aware of their strengths and not dwelling on their “weaknesses?” Do they understand basic financial principles? Do they realize they can find a profession that enables them to do what they love?

Based on our experience assisting people across all stages of life, here are 10 ways we can help shape our youths into responsible, industrious adults.

  1. Discuss how much things cost with your children. They may not appreciate what it costs to run a household, so creating conversations about what a home, car, groceries and college tuition cost can give them an appreciation for working and the value of a dollar.
  2. Share your family’s budget and all your family’s costs. You can also discuss the finances of families below and above your socioeconomic level. This will give your children additional perspective.
  3. Provide examples of the available careers and the average incomes of these careers. You can use this as an opportunity to discuss what they may want to do for a living.
  4. Instead of giving your children an “allowance” or paying them to do chores (which only trains them to have the mindset of employees rather than business leaders or entrepreneurs), consider rewarding them for thinking of ideas for starting a business. A basic lemonade stand or garage sale at your home can go a long way toward teaching this invaluable lesson.
  5. Show them how investments in stocks, bonds, and real estate could one day provide passive income for them so they can make money while they “sleep.”
  6. At the breakfast table, have a discussion with your children about what excites them and their innate talents. Ask them what they are passionate about and have a conversation with them about how that passion could become provide a fulfilling livelihood.
  7. Explain the critical importance of living a life built on integrity and accountability. These traits are key lynchpins for success — both personally and professionally.
  8. Go over basic banking and budgeting principles, such as paying bills in full and on time, and ways to establish good credit.
  9. Help them set financial and personal short-, mid- and long-term goals. Having their “eye on the prize” is a great motivator for hard work, personal development and teamsmanship.
  10. Finally, the best scorecard of financial success is “net worth.” Explain the meaning of this term and how the little things they do each day — every dollar they choose to spend or save — can determine this measure of financial success.

For many professionals who are not in the financial industry, these concepts may not be naturally intuitive. Many folks are brilliant in their careers but terrible with their finances. And that’s okay — nobody is expected to be a genius at everything. However, in those cases, it’s important to seek assistance from qualified financial services professionals who can provide the necessary guidance.

The Institute of Financial Wellness, as America’s first multi-media financial education platform, provides unbiased, user-friendly content and resources from an advisory board of nationally noted thought leaders — at no cost. Take advantage of this and other resources available.

In short, it’s our responsibility to help our youth develop the right mindset and the habits they need to succeed in life — and to lead them by example.

Erik Sussman, CEO of the Institute of Financial Wellness, may be reached at erik@the-ifw.com

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