Coming up today is part three of our financial legacy conversation, helping parents and grandparents figure out how to best support their children and how that fits into their overall financial plan. Today, the focus is all about financial literacy, how to best help your children with that.
That's coming up next. Hello, welcome in. This is Mr. Stillman's Opus. He is John Stillman at Rosewood Wealth Management. I am Ben George.
Glad you're here. We've started off with a conversation about getting your kids off the payroll. Then we talked about college costs, how to best support your grandkids if you want to do that and help with college.
Today, John, it's all about financial literacy and this is a big one. I know, I think probably a lot of your clients work with their kids and help them understand about money, but so many of your ideas and beliefs and the way you approach money is instilled at a young age. Yeah, that's true and I think for a lot of people, they see their kids in their 20s and 30s, you know, getting out into their careers and they're watching the way that they spend money and saying, wait a minute, where did they learn these behaviors from? We didn't spend money like this.
Where are they picking this up? And it's like this jarring thing to some parents to watch the way that their kids are with money and wondering, well, how do we fix this? This isn't anything that we taught them. Yeah, and today's question, kind of the idea we want to explore today and talk through a little bit is, you know, now that you have kids out on your own, they seem to be getting by just fine. As you point out, they got a job, they're supporting themselves, they're off the payroll as we talked about in that first episode, but they don't have that true financial literacy that maybe you had early on and had those good habits and skills with money and you're wondering what you can do to help improve them in that area. So, that's what we're going to talk about today.
Again, if you have any questions, rosewoodwealthmanagement.com, start there. So, John, how do you help somebody in this situation? If someone has kids that are doing well, out working, but maybe aren't saving enough or really haven't started those habits of putting money away towards retirement, just don't have all those financial skills maybe that you hope that they would have at this point, what are some things you can do? So, part of it is let's understand where you were at their age. Were you at age 27 or 31 or whatever age your kids are now? Were you aggressively saving for retirement at that point?
Maybe you were, maybe you weren't. If you were, then maybe you say, all right, why did I not communicate these values to them in a way that it kind of sunk in or maybe you did communicate and they just chose a different path for their lives. So, let's first understand who you were at their age. If you say, yeah, I didn't really get serious about saving for retirement until I was in my mid 30s or maybe 40. Okay, well, if they're 27 and they're not serious about it yet, yeah, it would be great if they were.
That money that they save in their 20s and have 40 years of compounding on that money, incredible growth that they could experience. But if you didn't do that and you turned out okay, maybe they're also going to be okay and it's just something you shouldn't stress about. So, let's first get to the bottom of that.
Second thing to address is what could you do to help them maybe change their behavior some? Maybe it's purely just communication. Maybe you spent your entire child-rearing years assuming that the way that you behaved with money, the things that you did, the principles that you abided by, maybe you just assumed that that was all getting passed along through osmosis.
But it actually wasn't. You needed some overt communication there and you didn't do that overt communication. Well, would it have been better if you'd communicated about money when they were 14 instead of now 29? Yeah, it would have been better but that's not to say that you can't start communicating about it at 29 and start saying, hey, here's some lessons we learned when we were your age. Here's something I wish I knew when I was 29.
And guess what? A lot of kids will take that seriously and they'll say, okay, well, this is good to know. Thanks for sharing. We've never communicated about money in this way. I appreciate this. I have a lot of clients' children who have come to see me not because mom and dad said, hey, you really need to go talk to John.
There was no brow beating. It was just, hey, here's some things we wish we knew. Here's a resource for you if you want some help. And then the kids reach out to me. And I'm the one telling mom and dad that they reached out. They didn't even say to mom and dad, yeah, I'm going to do that. Mom and dad find out from me that I'm talking to their kids. So, sometimes that communication can sing through even when they're adults that seem like they're kind of set in their own ways. If that doesn't work and you're still saying, yeah, I really wish that I could make a difference in the way that they handle money, well, maybe there are some carrots or sticks involved that you can help kind of push them in the right direction with.
Now, if they're not still on your payroll, the sticks are going to be a little bit tougher, right? Because there's not really anything you can do, nothing you can take away from them and say, well, if you don't do this, then I'm going to stop paying this for you because you're not paying any of their bills. Now, if you are paying any of their bills, that gives you a great opportunity to step in and say, all right, well, if you want me to keep doing this, then you need to show me this. You need to learn how to do this. You need to show me that you're making progress in this area. But let's assume that they're not on your payroll.
And then it's a question of, okay, well, how can I really make a difference in their behavior? And this could be maybe the carrot where you say, look, you guys aren't saving anything for retirement. I think it would be great if you would save some for retirement.
Here's what I'll do. If you will do 50% of your Roth IRA maximum, at the time that we're having this conversation, if it's somebody who's under the age of 50, their Roth IRA max is $7,000 a year. So maybe say if you'll do half of it, if you'll do $3,500, basically $300 a month that you save for your own retirement, if you'll do that, then I'll give you the other $3,500. I'll match it and allow you to be able to max out your Roth. So they have to have some skin in the game, but then you're going to motivate them by helping them out and doubling their investment off the bat. It doesn't have to be 50-50. If you know their situation and you know they wouldn't be able to come up with $3,500 a year to put into the Roth, but you do want to start getting their behaviors working correctly, maybe it's just $100 a month.
And if you're in a position to make up the rest, they do $100 a month and you do the other $400 plus to get them up to being on pace to max out the Roth for the year, maybe there are things like that that you can do. So you got to understand your kids. You got to be willing to communicate about this stuff because a lot of it with good communication can be solved, but just a good conversation. But then sometimes you do have to find more creative ways to help out. Now, let's say you've exhausted all of those steps. You say, I've tried to do the carrots and the sticks and the communication and nothing is sinking in.
Now what? Well, now is the part where you have to remember that they are adults and you want to do what you can to help. Maybe it's painful to watch them make mistakes, but at the end of the day, it's not your job to micromanage their lives. And so we're always trying to strike this balance between helping out, trying to be influential, but at the same time, not be overbearing or manipulative.
So again, you want to understand your family dynamics, know how things are going to be perceived by their kids, like it could be that you have a kid who's married, and any help that you're providing to them would be really appreciated by your son or daughter. But maybe to their husband or wife, it's not a preciate it. Maybe it looks like you're overstepping your balance to that daughter-in-law or that son-in-law of yours. So you just have to be really aware of that stuff. The more you can communicate, the better is usually the way to look at it.
Yeah. Communication always comes back to that. It seems like we talk about that in all different aspects of financial planning, but I'm curious, John, how you balance it as someone who works in this industry and is trying to help others with their financial habits. How do you balance not trying to push too much on your kids at a younger age? You want to set them up so you don't have to worry about these conversations maybe when they're 30 or 35. So how do you balance maybe pushing too much on them versus making sure they're getting all those right messages early on in life? You're talking about how I do it with my kids? Yeah.
And how would you maybe guide someone that's kind of wondering, they hadn't quite got to the spot that we're talking about today, but trying to avoid getting to that point. Yeah. Well, with my kids, we're big on fines. We do a lot of fines around the house.
You don't flush the toilet when you're done. That's a dollar fine. If that sounds like an awfully specific example, well, you can probably deduce that that's a problem that we've had around the house. You leave your bedroom light on and go to school all day with your light on. Well, you know how dads are with turning lights off.
That's going to be a fine. You get home from school, you're going to need to go turn your light off and then bring me a dollar. So we try to do things like that so that there's a correlation between bad behavior and losing money and good behavior or doing work, doing chores and earning money.
So we're trying to plant those seeds right now. At the ages of 11 and eight, we try to not get a whole lot more complex than that, but then there will be times in their teenage years where the conversations do get a little more complex. If you're in a situation where your kids are a little older or maybe they're teenagers and you're just trying to figure out ways to help them out, but you don't like being the bad guy.
You don't like being the bearer of bad news and the one that's constantly brow beating on stuff. A lot of times people will send their kids to me so that I can be bad cop. They just say, hey, we'd like to help you out with this. If we're going to do that though, you really should go talk to John and just kind of get a feel for what you should be doing with this money that we're going to give you and things like that.
Then they come talk to me. I can be the bad guy and tell them, hey, yeah, you need to be saving that. You need to be putting this away for taxes.
You can't spend it all on a vacation. Maybe if mom and dad aren't comfortable having that frank conversation, they can delegate it out to somebody like me. Well, if you're ready to delegate that task to John, you can always do so by going to meetwithjohn.com. You can find a time that works for you. Put it on the calendar and you'll be off and running, but you can also go to rosewoodwealthmanagement.com to learn more about John and Rosewood as well.
Well, financial literacy, very important. Part three of our series. We've got one more to come, so please subscribe wherever it is you watch or listen. We'd appreciate that support, John. Thank you as always. Yes, sir. Talk to you soon. Carolina Wealth Stewards doing business as Rosewood Wealth Management is a registered investment advisor in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer as the rendering of personalized investment advice.
