Have I ever told you the story of my then-teenaged daughter, Kimberley, asking me to buy her a house?
She came to me when she was about eighteen and said, “Mum, you buy houses, don’t you?” And I said, “yes.” And she said, “will you buy me one?” And when I finished laughing hysterically, I pointed out that that wasn’t how it worked and that I invested in property as a long-term business opportunity, not just something that I freely passed around.
I showed her how to create an Excel spreadsheet of her own, work out how much it would cost to buy a house and what the deposit would be. She created the spreadsheet, and I answered her questions. Lo and behold, four years later she’d done it. The only monetary contribution we made was a small loan to cover her existing car loan, which she promptly paid back. We helped her get on the ladder, but we did so primarily through education.
She’s now onto her second property and very happy in her family home. She’s had no money from us to do it, and she understands more about property and finance than many young people who are just handed a house or a lump sum of money.
I wanted to tell you this story because it speaks to how money affects different generations and their interactions. There are various ways to look out for your younger family members just as there are various ways for younger generations to support older ones. This brings me to one of the most important points I speak about with clients: family comes first, but you are part of that family too. Your cup must be full before you can pour out for others—not only for your happiness and wellbeing, but for the family as a whole. I’ll explain what I mean.
Many of the clients that I speak to very often have been waiting to prioritise themselves. I have an “avatar” of a typical type of client I work with called Alice, the Family-Nurturer. Alice has waited until her family has grown up before deciding to live her life for herself. This avatar is not necessarily a woman by the way; the name “Alice” just makes speaking about this hypothetical client easier.
“Family about all else”, is a very typical value of a Family Nurturer and because they are second on their list of priorities, they are often older, by the time we speak and work together. This is first and foremost an avatar of someone who has got fewer years in which to make bigger plans, but who is determined to make these plans for that very reason.
This person’s legacy is very much on their mind and that is motivating them to make plans about their future, their wealthy life. The children are taken care of for now, though Alice is still figuring out the dilemma of how to support them or provide for them as young adults. We often must have a conversation where I explain that instead of giving money directly to their family now–which means they no longer have control of the money and it isn’t being put to work—there are other ways to use that money for greater long-term payoff for everyone.
If you give your children a cheque, they might use the money for something now, like a house or a car, but it won’t help you in the future. Perhaps more importantly, when you start to need medical and other types of support, that money will be gone and you’ll either go into a council care home, or you’re going to have to draw back the money from the children to support you. The kids are going to have to pay to put you into a care home and support you anyway.
Find your golden goose
So, I ask my clients: why not invest the money? Think of it this way—have you heard the fable of The Golden Goose who looks quite ordinary and boring but lays solid gold eggs? Let’s buy you a golden goose that makes repeated eggs. You can then have the eggs to support you while you are alive, meeting your needs. In the early years you can have your fun–take up golf, go traveling–whatever interests you!
When you eventually need more care, the eggs will be there to support you. When you do finally move on, you will be able to pass down the money you had wanted to share to begin with, plus more—often much more. This is because you will have your goose and all the golden eggs it has created. You might even get more geese laying even more eggs as you move forward with your plans.
To give you a concrete example of this: imagine your “goose” is your capital—perhaps 50,000 pounds. You might invest this capital in property and use it to purchase a flat or a small home and rent it out. Over the course of your later years, you will not only maintain the value of your principal, but you will have all of those rent cheques—golden eggs–that have come in.
Maybe along the way you used that income to purchase another property. This second “goose” starts to lay eggs as well and you find that at the end of your life you have multiplied your principal several times. This goes to your children or to whom or whatever you wish to leave it to. You lived those final years in style and on your terms and then left a legacy you can be proud of. You have put your family at the fore of your wealth planning, but it didn’t cost you your ideal wealthy life, the life of your dreams.
Aren’t you part of the family too? Shouldn’t you put yourself first? Think about it; we don’t want to create a problem that didn’t exist before–particularly as the Baby Boomer generation is moving into their sixties and seventies. This is a situation where we could end up with generational debt because our children–and potentially even our grandchildren–have to step in to support us as we get older and have increased care needs. We are living longer than we think and it costs more than we can predict sometimes.
After retiring at 65, we may life thirty or even forty more years without a salary. We can’t put that pressure on our children or other family members, and equally we don’t want to retire after working for forty years only to pinch pennies and sit at home, miserable and bored.
Family first–and you are part of that family. Don’t subjugate your needs and desires, and then wake up years later wishing you’d done it differently. We don’t have to do things the old-fashioned way and if we are smart with our money and plan properly, we don’t have to make so many sacrifices. Never forget the power of legacy for driving your wealth journey, and never forget yourself either.
Please remember, I love when people get in touch to chat about my articles and podcasts—and anything else. For more impactful wealthy life tips, please visit my website www.vickiwusche.com, listen to my podcast here and here, or schedule a free call with me! Putting yourself first isn’t selfish: prepare properly and find your golden goose.