TheLoop21.com

By: Dr. Boyce Watkins | TheLoop21 (Add to your loop)
Fri, 07/23/2010 - 00:00

We need to teach our children how to manage money so they don't depend on us for the rest of their lives.

Most Americans are accustomed to hearing regular talk about 401ks, IRAs, and all the other things we need to understand in order to prepare for retirement. You may also know that most Americans aren’t prepared for retirement at all. The economic disaster that lies just over the horizon for our country is going to be unprecedented in magnitude.

An infrequently discussed aspect of your retirement plan has nothing to do with money at all. It involves those little human beings you created after three glasses of wine on a Saturday night: Your children.

Most of us underestimate how the way we raise our children can have a huge impact on the comfort, or lack thereof, we will experience when we decide to retire. The relationship is actually a simple one when you think about it.

Most of us go through an economic life cycle, where our peak earning years are between 50 and 60 years old. That’s when the temptation is greatest to become the financial rock for those we love, even at the expense of our own economic demise. Our children are in their twenties by that time, and we want to be able to help them. Many parents do. This is in addition to footing every bill from the time they were born and paying tens of thousands of dollars for them to go to college.

The problem with the standard approach to child-rearing here in the U.S. is that we are accustomed to raising our kids to be dependent upon us. We don’t teach them how to manage money or how to go out in the world to make it. We don’t explain that by the age of 25, they should be on their way to not only being economically independent, but possibly even in a position where they can be a productive asset to others in the family. Instead, we raise them to be weak.

Read More:

• While you are growing your net worth, pay attention to your self-worth
• If you don't want to die broke, better start saving now
• Does being a mom mean losing financial independence?
  

How can all of this impact your retirement? Well, the little person you’ve raised to depend on you in your 40s, 50s and 60s may end up continuing to depend on you in your 70s and 80s (how many 25-year olds do you know who live with their parents or borrow money from them?). Even if they don’t depend on you to get what they need, they are not prepared to be a financial resource for you in the event that you run into money problems. In other words, how your children were raised will play a role in their ability to be an additional safety net for you in old age.

A counter example I can share is that of my own mother.