2998: [Part 2] How and Why to Pass on Financial Values to Your Heirs by Kathleen Coxwell of Boldin on Financial Legacy Planning

[00:00:00] Now before we start, you might want to check out our other podcasts covering topics like personal development and minimalism, money, health, relationships, and more. So to optimize your life in other areas, just search for Optimal Living Daily in your podcast app. Now on to the show. This is Optimal Relationships Daily, How and Why to Pass on Financial Values to Your Heirs, Part 2 by Kathleen Coxwell.

[00:00:28] 6. Find a Trusted Guidance and Resources Money is a tempting business, and if it were easy to build wealth, we would all be rich. In addition to building your own good financial values and habits, teach your children to seek out financial advice from people who are legally required to be their fiduciaries. Your care and interest in their financial education is a model for them of what a fiduciary does.

[00:00:52] You can also teach them to always look for the fees and costs hidden in the fine print, and tell them that if someone's financial interest is not aligned with their own, it can lead to problems, like investment advisors selling overpriced, underperforming products, or brokers who try to churn their brokerage accounts. 7. Always Ask Questions

[00:01:13] This is the most important lesson of all. Don't put your financial future at risk by accepting other people's assumptions or taking their advice uncritically. Financial literacy has become ever more important as the old financial safeguards of the 20th century, pensions and social security, have either fallen away or grown more unsustainable.

[00:01:36] 8. Teaching your children the basics of money management listed here is important. But teaching them how to be flexible in their assumptions and responsive to new information is also a bedrock principle of accumulating wealth. 8. Keep Learning Lifelong learning and a growth mindset are proven to deliver happier and more productive lives, and it's true of financial education too. There's always more to learn, and investing in this knowledge is worthwhile.

[00:02:05] 9. More Practical Tips to Teach Your Kids Financial Values The suggestions listed so far will help fortify the financial values you want to teach. It's important to incorporate these values into your everyday conversations. No matter what your children's age is, talk about money. Convey what it means to you, how you think about it, and more.

[00:02:27] 10. Too many people grow up thinking that money is a taboo topic, and that contributes to low financial IQ. We can't learn if it isn't discussed and demonstrated. Tell stories about how money has played in good and bad ways in your life. Help them understand how your own parents were raised and their approach to money. Talk about money. Here are additional concrete steps you can take at different points in your child's financial life to teach them the value of money.

[00:02:54] For kids, create an allowance tied to performance. Many experts agree that the most effective way to teach children about money is with an allowance that is tied to performance. Giving them money with no strings attached won't get the job done. Set up an investing account in their name and go over results with them periodically. Kids as young as 9 and 10 years old can appreciate the strategies of value investing, and they're at the perfect age to take research around investments seriously.

[00:03:23] A word of warning, a proprietary brokerage account for kids should not be enabled for margin trading. And, highlight trade-offs you make. Talk about everyday money decisions. If you are considering buying a car, talk with your children about that decision-making process. Are you giving something else up? How do price and value factor into your car choice? Are you getting a loan, or are you buying it outright? Discuss the pros and cons of the options.

[00:03:50] For teens, make them get a summer job. Work is a trade-off between spending time earning money and spending money in your free time. That important lesson will help kids understand the value of their time as well as increase their bottom line. Add your children as an authorized user to your credit card. Building credit early will help them when they need to borrow for big life purchases down the road. Adding a child to your credit card will help them build a credit history.

[00:04:18] And you can teach them about different types of credit. Send them to the grocery store. It's important for kids to learn what things really cost. And the cost of groceries can be a real eye-opener. Challenge them to feed the family on the equivalent of their summer job earnings. And discuss education costs. Education costs, particularly college tuition, can often make saving for retirement difficult. You want your children to understand your financial needs and how they relate to their own current desires and future burdens.

[00:04:49] Children can learn from your mistakes and decisions if you are discussing the issues with them. For adult children. Encourage them to set up a Roth IRA. Once adult children have entered the workforce, they will be earning money. But they probably won't be in a high tax bracket. A Roth IRA is designed for younger savers to invest after-tax money that can grow tax-free and will not be taxed at retirement. Help them buy a house. Home equity is a pillar of financial security.

[00:05:18] You can help your adult children navigate the complexities of buying a house. And if necessary, you can help them with the down payment. All the other lessons you taught them about good versus bad debt, how to invest in their future and budgeting, should serve them well as homeowners. Encourage them to maintain a long-term financial plan. Once they start making their own money, it is the time for them to start planning retirement. After all, the earlier you start saving, the easier your future will be.

[00:05:48] And inform them of any financial legacy they might receive. It can be useful for adult children to understand if they stand to inherit any funds. And of course, it's also good for them to know if there won't be anything left, or if they might be called upon to help out with old age. Talking about money is almost always a good thing. You just listened to part two of the post titled,

[00:06:15] How and Why to Pass on Financial Values to Your Heirs, by Kathleen Coxwell. And a wonderful finish to this post from Kathleen. No surprise there. I really love one particular note from this second part. And that is the idea of talking about money trade-offs with kids. Well, it was listed as being for young kids. But to me, it's something we best keep in mind no matter what age we are or how old our children are.

[00:06:42] Money trade-offs extend far beyond money itself. What and how we spend also affects much larger items, you know, such as our time and our life experiences even. And we rarely do a deep enough dive into our expenses to truly assess these trade-offs. One that I always think about is the decision to live here in the U.S. You know, personally, and I think I speak for many, I feel there are many appealing qualities about living outside the country.

[00:07:12] Lower living costs being just one of the many. But why do I and so many other Americans who feel the same way choose to stay? What are we trading off? Well, a big one for me is definitely living near the people I love and the communities I've established. Or just avoiding the exhaustion of moving would be another. Maintaining a certain job, etc.

[00:07:34] These types of things, and many others, are what we are deciding to keep as a trade-off for spending more money living here. So, think deeply about any major life choices and the role that money plays. Because, if you think hard enough, it is always present in one way or another. It's at least one small piece of the puzzle. But, we are going to wrap it up there, my friends. I really hope you enjoyed this post as much as I did. I think it was a great one for helping us evaluate money more deeply.

[00:08:03] And, of course, the way it impacts our children and other relationships that we may have. Aside from that, have a great and a safe Friday. Enjoy yourselves. And, I'll talk to you again tomorrow, where your optimal life awaits.