How often do you find yourself buying stuff that your kids want but don't need? I was doing it all the time, quite unconsicously, I confess. But ever since my lively discussion with investment counselor and father of two, Al Tynan, I have found myself saying "no" to my daughter's wants more often. This has not only been good for my family's bottom line, it's been great for my daughter's self-esteem and sense of fulfillment. But let me introduce you to Al first.
Chartered Financial Analyst designation and is an investment counselor at RBC Phillips, Hager & North. His clients have to have at least a million free and clear to invest before they can sit down and pick his brain. Not to mention his office is on the twentieth floor of a stunning waterfront building in downtown Vancouver. From the conference room window, I could just about touch Grouse Mountain's snow-bare ski runs.
So what was I doing in that multimillion-dollar setting talking to a rugby player turned financial advisor who deals in the millions of dollars? Well, I wasn't there on investment business. No, I dropped by to find out what a guy like Al teaches his kids about money. A lot of useful things, it turns out, and it all hinges on this idea:
Our job as parents is to take care of all of our kids' needs but not all of their wants.Al learned this lesson early. His father, a lawyer, retired when he was just 40 years old. As it turns out, he had saved a portion of his employment earnings and had invested in stocks. Essentially, the family of five lived on the dividend income generated by those stocks. In his early years, there were months where Al and his brothers had their needs taken care of but not all of their wants. Al was okay with that because he saw that while finances weren't always easy for his parents, they truly enjoyed family life.
The other powerful lesson that came out of his family's unique financial situation was what Al calls the "get rich slowly scheme" or the power of owning stocks that pay dividends. As early as he can remember, Al got a nine-dollar dividend cheque in the mail every three months from Imperial Oil. This is something his father set up for him and something that Al would like to set up for his kids too but, these days, companies don't send dividend cheques in the mail. For a kid, looking at numbers on a computer screen just isn't the same thing as getting a cheque with your name on it in the mail.
As much as getting a dividend cheque in the mail is a thing of the past, Al worries that the concept of working hard for what you get is going that way too. He brought up the point that when parents constantly buy full-priced "stuff" for their kids, such as pricey electronics and other luxury consumer goods, they run the risk of hurting their kids' satisfaction down the road. That made me think.
When Al's eight-year-old wants a new luxury gadget, he explains to her that it's not a "need" and therefore that it's not his job to buy it for her. He then encourages her to earn money to cover half the cost (he will pay the other half). When she has saved up the money, Al suggests that they shop around for the best sale price or even check Craig's List for a used one. That way she can save and grow some of the money that she has worked so hard to earn.
This is a practical idea that holds three great life and money lessons for our kids:
- Wants and needs are not the same thing.
- Needs are more important than wants.
- Getting everything you want won't necessarily make you happy.
Fulfillment. That's the word that I'm going to stand on the next time I say, "Sorry, sweet-pea, I'm not buying you that pink Nintendo DS-I. If you want it, you'll have to pay for it yourself. Let me show you how."
Copyright 2010. Laura Thomas. All Rights Reserved.
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