The Financial State of North America
...and what we need to do about it.
Financial Crisis at hand
The Financial State currently in North America is likely the worst it has ever been overall. Current economic stimulus from governments has hidden that from many, but many others are feeling it like never before. Those that have had their financial world held up by government spending and handouts and other initiatives on rent abatement and foreclosure will soon begin to see the lasting effects of this most recent economic crisis caused in part from this nearly 2 year long Covid Pandemic.
Regardless of being in Canada or the United States, government has intervened with numerous spending packages, interest relief programs and other initiatives to stave off eviction and foreclosure. If that was the only damage being done, that would be enough. However, by manipulating interest rates for lenders as an incentive to create spending and investing, there is also a false confidence being built up of the health in the overall economy. Employers are further incentivized to automate and contract out positions to have less exposure to the high cost and risk of bringing workers onsite. Increasingly full-time employment looks a lot more like having 3 part-time jobs for more and more North Americans.
Falsely rising equity values for North Americans and increasing debt seem to be the most recent continuing trend of the economic crisis building across Canada and the United States. This might be worrisome enough without the increasing cost of education, shortage of fulltime employment opportunities, increasing costs and barriers to home ownership, along with the higher risk to business ownership, more and more complex investing environment. Adding instability in any and every financial market and we see a generation that will struggle far more financially and potentially have far fewer and far more challenging opportunities than any generation in the past 100 years.
Finding the Causes
Adding to this concerning revelation is a recognition that parents have far less understanding of what their children are about to face than parents of any previous generation. It has long been expected that each successive generation would face far greater financial and employment opportunities than the generation previous. To go along with that, each new generation also seemed to be well adapted to take advantage of this expectation using the same general skills passed on through either parents, schools, or the marketplace.
Change however has finally caught up to us. More accurately the Speed of Change or the speed at which things are changing has outpaced our abilities to successfully adapt and for the generation before us to either recognize that current skills seem to no longer apply, or that the skills that may actually be the right skills have not been taught when they should have been. To be a little more blunt, someone took their hand off the wheel, eyes off the road, and foot off the gas. At the same time as one generation stopped teaching, the next generation stopped listening or paying attention. Basically the kids of one generation watched without interest at the things their parents had been doing for decades, but did not grasp the purpose, logic, value or need of those things. At some point these parents must have thought that the kids were picking up these skills since they were present and accounted for and assumptions were made.
Sharing Blame
The next thing we see happening was entitlement, greed and "ME" attitudes setting in. In other reports the timeline for all this and the speed of this change is outlined along with the decay of this financial understanding, but here, we will just point out simple comparisons and factors.
One generation that would buy a starter home and put 2 or 3 kids in a room and have a 3 bedroom house work for a family of 6, gave way to a family of 4 living in 5 bedroom homes. A generation that purchased a home when a couple married, held one or two jobs (often at the same company) for a whole career, and drove the same car for 15 years ushered in a generation that upgraded, traded up, expanded, changed careers with far greater frequency than ever before. We build bigger, consumer greater, spend exeedingly more than any generation before. There are more options, colors, brands and models of everything to choose from than ever before. And it is not working.
The skills that have now skipped at least one generation, are proving to be the skills that are most needed. These skills, although simple, are profoundly more complex in what they actually provide than we ever knew, and they are gone. The skills are missing and parents seem to be uncertain how to proceed to pass these skills on now. Where to begin? What do kids need to learn? What if I don't know how to teach my children about finances?
This report discusses just that. Both to explore how we got here and to talk about your kids and specificially your kids and finances. Before we continue now discussion on the problem what to do about it, I should give a little bit more information about me.
Why do I think I can help?
To understand my concepts about teaching kids about money, knowing a little about me is a good place to start.
I am first a father of 4 teenagers from 13 to 19 years old. I am an entrepreneur owning various businesses over the past 30 years, a business development consultant working with numerous small software businesses over the past 25 years, an investor in private business, Real Estate and stock markets....and I am also a volleyball coach working with kids from 4 or 5 years old developing movement skills, through to college level athletes developing their athletisism, specific sports skills and tactics at a very technical college level.
So, when it comes to teaching money, business and children, I ended up mixing skills developed in all these areas.
The perspective I seem to have ended up with is looking at the growth of specific skills for people in a young age group, from a context of where do these skills need to be in a complex fast paced technical college gradution level at some point in the future.
After over 15 years of teaching my kids about finances and now with 4 teenagers learning to manage money, sharing with friends different lessons on what they may do to help their kids develop financial skills at different ages, I went back and reviewed all these lessons, experiences and the results, putting together a detailed concept of what we had done to get there. Shortly afterwards followed a manuscript and next courses on financial management. Until I thought back to how little I had learned as a kid and as I began teaching others, answering questions both financial professionals and my friends asked me about teaching kids about money, I never really understood how little most kids are taught about money.
So, now as I have shared I am now taking these unique perspectives working with kids......always teaching them the same skills, the same game, the same principles simply at more and more advanced levels and changing the game....now it is about money.
The wrong teaching?
Now the point of this discussion is two fold. As parents, as business people, building careers we have spent countless hours learning daily, putting significant effort into our careers and businesses. And most of us do this for our families, so our kids have a better life, a better future and more opportunities. I believe that as parents, we need to remember to also give them our time in teaching them financial management skills, because number one, no one else is....and number 2 I have found that our kids need time to learn by failure and by experience. Coaches coach through failures....First modelling a skill, allowing for experience and correcting mistakes continuing to developing skills through repetition and correction, and this happens as I pointed out for many years in sports.
We do this somewhat in the educations system. We teach, we quiz, we teach, we quiz, we teach, we quiz....then we test on the collective teaching. I think we miss out a little bit on correcting specifically on the errors after a quiz....we may move on too quickly. We teach from 5 or 6 years old until 18, 20, 25 years of age depending on the learning outcome goal.
In sports, we train often from the same age and continue coaching and training all the while competing....in the case of professional athletes well into the 30's.
However when it comes to Money, leave home and good luck.
The teaching we offer to adults after this then is "How to get out of Debt", rather than to our kids, "How to avoid debt and create wealth, businesses, careers and investments."
I spoke with a business woman recently, and we spoke about this also, the realization we have as parents when our kids finish school, and we then find out that they simply didn't learn what years ago may have been taught in a home economics program.
We Failed to Teach
I have found the main reason, and I experienced it again just a couple days ago, is parents typically don't believe that, based on their own financial circumstances, that they know enough about money to teach their own kids. I was speaking with a gentleman the other day, that when he found out what I was doing with my time, was super excited, and said that although maybe his kids are doing better than he and his wife had done with their finances, he wished he would have been able to teach them more financially, he just didn't think he knew enough to help them. He said that they had made lots of money mistakes, and although now in their 60's they were ok financially, but they could have done so much better with some kind of financial education program for their kids.
I think if you look at the record debt rates, this attitude continues to grow and for the most part is getting worse and worse. Different studies of networth and debt continue to show numbers like 80% of the North American population struggles with debt, poor investing habits and low networth. Increasing housing values are often the only growth in wealth for many, but the debt levels continue to grow regardless.
How do we change the outcome?
So, how do we typically combat this as a society....we wait until we are in debt and take a financial program to teach us to get out of debt using a budget, instead of learning to plan our spending as young adults and never getting into debt.
I don't believe that parents should avoid teaching their kids about finances. By the time you have made some financial mistakes, you know you have. It may take time to fix the debts and lack of investing, but not too late to help your kids to learn to avoid debt.
How do kids learn?
From my experience coaching as I mentioned, kids learn from experience and experience takes time to get. That is good for parents if they start young. If they start with simple lessons and if they intentionally continue to build on those simple lessons, they can continue to grow in their financial knowledge as they teach.
I have now moved to teaching and coaching parents to train their children. I spent 30 years coaching your kids...and now I want to help parents understand the process kids need to follow to have success.
Your kids need time, failure and experience even with money. Coaches coach through failure, they don't avoid failure, but they have practice time to teach, train and coach kids to success.
I am looking forward to sharing how as parents you can change the outcome for your children.
We have created the program you need to do this!!
It is my hope for you to see your child have their best financial future.
