Are You Bankrupting Yourself and Your Children?
There is nothing like the joy of parents being able to treat their kids to stuff they really want. Experiences, vacations, toys, and all the other fun material stuff that seems to make the world go ’round. For working parents the desire to curb their guilt born out of the conflict between work and family, the pull to “make it up to them” with money is even greater. Add to that the additional challenges of being an LGBT parent, and the pull can be even greater. With all this emotion flowing around it is easy to see how quickly and innocently parents can risk their financial future and bankrupt their children in the process.
SmartMoney recently wrote about this very problem in the article “Overspending on Kids Risks Parents’ Financial Future“.
“When it comes to the kids, parents often let emotions rule over financial prudence. Often, that leads to financial mistakes most are embarrassed to admit.”
Let’s face it, most money faux pas happen because we are driven by our emotions. We have some emotional need we’re not getting met in a healthy way so we freak out and engage in emotional spending. While I am not a parent, I’ve been a kid and observed enough to know that for parents the emotional pull to spend on the kids can be tough to get a handle on. After all, there is no manual for parenting, and certainly no book to teach LGBT families how to do it perfectly, so we’re all out there just trying to do our very best. Even with great resources like Mombian, there is no one way to raise a family, even an LGBT one. Add to that the insane peer and societal pressure for a kid to keep up with the Sally and Billy’s in the neighborhood school, it can stress a parent out to the max. While you can teach your kids the value of money and disengage from the spending cycle to some degree, it is still tough for a young kid to march out in the world feeling different because they not only have two mommies or two daddies but also because they don’t have the same types of clothing, toys, or other goodies as the other kids. As adults we should know that it is not the sneakers, jeans, or fancy vacations that matter most. Yet we bend under the challenge of taking the high road (even though it is ultimately more rewarding) as we raise a family.
In the SmartMoney article, the stories are bone-chilling and we’re talking about high earning, highly educated people in wealthy neighborhoods. What the heck are they thinking?? Consider:
In wealthy Westchester, N.Y., a couple earning $200,000 a year could barely afford the $2,500 fee that Kathy Boyle, a New York-based CFP charges for creating a financial plan. “If you drive by their house in Westchester, their life seems like nirvana. They live in a $1.1 million home on a gorgeous road, with two luxury cars in the driveway,” Boyle says. “But walking inside their financial house, it’s in shambles.”
Maybe it is just me, but I couldn’t sleep at night living a total facade. Not only do situations like this impact the parent’s financial future but teach the kids that life is all about appearances. Not only might the parents end up bankrupt now (or in retirement), they also set their kids up for a rude awakening once they are on their own. They go out into the world with a need to maintain a high brow lifestyle at all costs unless they change their ways.
So what are the biggest mistakes parents make? According to this article they are:
1. Ignoring their retirement.
2. A bedroom for everyone.
3. Keeping up with the Joneses’ kids.
4. Not teaching them about money.
From what I can tell, the lessons you need to teach your kids are the same lessons we need to be reminded of as adults (especially when the emotions and desire to “have” and “buy” kick in). If you focus on raising them with a solid sense of WHO they are and a core of self-esteem on which to base their decisions, the money piece will fall into place much easier. Teaching them the mechanics of dollars and cents then becomes the easy part. Without this strong foundation built on “money does not buy happiness” and living reasonably within your means, finances will be nothing but a slippery slope for parents and kids alike.