An insightful episode of the US comedy TV series Seinfeld gave some great advice to any parent who ponders what they should say to their children about avoiding the money mistakes they made in their lifetime.
On my radio show on Talking Lifestyle called On The Money, I often get questions from parents wanting to give their offsprings better money leadership than they got when they were young.
This is where the Seinfeld episode has plenty of merit and it’s the one where George Costanza (one of life’s great losers, on his own admission) was given the idea by his best friend, Jerry Seinfeld, that if every major life decision he made was wrong, why not try doing the opposite?
Unlike most of us, George embraced change and did exactly that. He got the girl and snared a job as a talent scout at the New York Yankees!
Sure, it’s a TV show, and a comedy at that, but it carries an important lesson for parents to teach their kids, as well as themselves.
If nothing changes, nothing changes. And this should be the starting point of any conversation with someone you want to influence. However, it needs to be inextricably linked to the first step on the staircase to economic heaven.
Assume the parent is the leader in this exchange of money-generating ideas, so to put the whole conversation on a hitherto not travelled road, the question has to be asked: “What do you want?”
Think back and ask yourself this: has anyone in your life asked this provocative question? If you can say ‘yes’ and the person in question then asked: what is your plan to make it happen?, then you’re probably a very lucky, one in a 100,000 person!
This is where our financial advisers start with our new clients and existing clients when it’s suspected that life goals were up for change.
This conversation piece makes it easy to ask the next question, which is: “What are you doing now to make this goal happen?” And this is when we, the influencer, can start doing some seriously valuable work.
Having a goal is the easy part. Most people don’t write up the plan. Some sage once said: “If it’s not on paper, it’s not on the planet.” Even fewer people assess how their plan is going.
Last week on my radio show, a young married guy called Vic rang me for advice on what to do now because he had spare money coming in each week.
I told him he could pay off his mortgage but he’d done that.
I suggested he could think about an investment property if he was paying a lot of tax. He was, but he’d already done that!
Next, I said he could salary sacrifice more into super but he was already doing that too!
This guy and his wife were prodigious workers and savers. They’d done the reading and asked the questions, which meant they were in an unbelievably small minority of young and older people in this country.
Next, I suggested that they could look for another house to upgrade to what might become their “forever house” but I was trumped again when Vic said that their current house was likely to be their forever house!
I couldn’t take a trick with this young accountant, so I offered him a job! But I did strike a chord when I asked what were their plans for the kids who’d eventually show up? Does he want to send them to private schools? What would that cost be? Was it wise to roll too much money into super? Should they maybe be investing outside of super for that eventuality, or some other big ticket item in the future?
Vic and his wife were very special young people but they still could benefit from an objective set of eyes and someone who could raise questions about what their total plan is and how they were placed to make it happen.
Even with his clear-cut quality as a standout money manager at such an early stage of life, the great characteristic of Vic was that he was smart to ring the radio station to tap into my brain to see if there was more that could be done to make his wife’s and his material life as good as it could be.
He was an inspirational young man and I didn’t get the chance to ask if he had a mentor in his life that set him on the road less travelled by most young Aussies.
As a parent who wants to influence, you have to be honest. If you haven’t done it proficiently with money, admit it and give the advice “don’t be like me.”
If you’ve done OK but learnt the hard way, then admit this too and tell your charges why they need to do the opposite.
And if you’re like Vic but only older, do your best to explain how it’s the dream, then the plan, and then the process, that has made it happen.
Once you’ve got someone loving their dream, that’s when you can suggest the hard things that will make the dream come true, such as:
• GST your life by cutting current spending by 10%. This gives you a saving amount that you then invest in property, shares, more super, or even a business.
• Go to an accountant and tell them you want to build wealth and legally reduce your tax.
• Go to a financial adviser and tell them you want to get rich — don’t be afraid to have this goal.
• Read books on great wealth-builders like Richard Branson, Warren Buffett and so on.
If you think that you’d like an actual investment process to show your son or daughter how they can build wealth, here’s one I used when my wife and I were young. Here it is:
• Buy a property in a suburb next to a booming one.
• Buy the worst house in a great street.
• Learn how to do basic repairs and restorations.
• Add rooms.
• Put in hard yakka making the grounds look green and great.
• Work extra jobs and even start a part-time business and throw the extra income at paying down the mortgage.
• Sell the house in a strong market.
• And go to the next suburb and buy the worst house in the best street!
Let me give you three little beauties for getting youngsters thinking about making the changes to set them on the right path to build riches.
First, as Robert Frost told us: “I took the road less travelled and that made the difference.”
Second, work out what you want, find out the price, pay the price.
And third, if anything is worth doing, it’s worth doing for money!
Good luck with your inspiration piece for your family and I guess you might find there’s some good advice for you as well.