Growing up, investing was rarely, if ever, a topic of conversation in my family. That isn’t to say my parents were financially irresponsible – not at all! I remember my dad consistently sitting down at the kitchen table to meticulously balance his checkbook and pay the bills on time. I also remember my parents living within their means, teaching us to give to charity, and around the time I started kindergarten, my parents opened a savings account for me.
Later on, during my high school years, I learned about investing. Many of my closest friends had parents who owned their own businesses, so they didn’t have company pensions or 401ks to help them invest their money and save for retirement. Through conversations with them, I learned basic, practical advice about investing and the importance of it. Because of that, I grew more interested in my own financial future. At 19 years old, I decided I needed to start investing my own money and eagerly opened a Roth IRA, depositing a mere $500 that year.
A recent study conducted by the company Aegon called “The Changing Face of Retirement: The Young, Pragmatic and Penniless Generation”, found that retirement shortfalls for employed young adults between the ages of 20 and 29 is due to a lack of opportunity to save, rather than a lack of will. Having just turned 30, and given my own experiences, I found this study incredibly interesting. Aegon found that 57% of the group polled say they know retirement saving is important, but they don’t make it a priority. So, we know they want to save and that they think saving is important – but what about actually following through and doing it? Would you ever praise a child for aspiring to do their homework before they’ve even started it? Would you be sympathetic if they told you homework was important to them, but that actually doing their homework was not a priority?
Do your kids or grandkids fit into the “Young, Pragmatic and Penniless Generation” classification? Will they? Without a doubt, the generation in the study is facing unprecedented levels of student debt, uncertain employment prospects, high housing costs, and the list goes on. But let’s not give our children an excuse to not save for their future. After all, the study also found that the leading source of retirement savings information is from friends and family. This was certainly true for me and set me on the right financial path at an early age.
Are you discussing or exemplifying to your kids sound financial management, how to live within their means, and how to take initiative for their financial future? This could mean learning things on their own, or seeking out a fee-only investment advisor like All Star Financial. Either way, let’s not only teach them the importance of saving, but teach them to actually do it! Please give us a call if you have a friend or family member who could benefit from some help or information on saving for retirement.