Trick Love the Kids!Apr 19, 2023
I come from a long line of mothers who would give anything for their children. My mother was(is) like this. My titi Maria was like this. My mama (grandmother) was like this. It's a beautiful experience as a child to know you have at least one person in this entire world who will always love, support, and help you when you fall down. While I aim to give my daughters the same level of security in my love, I will always draw a boundary around the financial support I can show them as an act of unconditional love.
You see, it's tempting to say:
I'll send my kids to private school if they need it. Who cares if it costs $30,000/year/child?
I need to hire my kids in my business, and set up a custodial Roth IRA so they can become millionaires!
I need to hand them a rental property when they graduate college!
All of these are beautiful sentiments and strategies you can implement to build wealth for your kids early.
However, the problem with implementing even a single one of these lies in you putting these goals before your own financial stability.
Trying to make your kids wealthy before you are is putting the perpetual cart before the horse. It's setting them up for a life of financially worrying about you and potentially having to support you.
Here is what you need to do before putting a single cent into any advanced strategy for the kids:
Pay off high-interest debt- If you have revolving credit card debt or personal loans, you likely need to focus on that and your own retirement. I know that compounding is important and you may receive a state tax break on your 529 contributions, but it likely won't eclipse the high amount of interest you pay on your debt. Get high-interest debt free first, then we can talk about putting money away for the kids.
Figure out your retirement investing plan- If you have no idea how much you are putting away for retirement, or how much you need to put away in order to retire well then you absolutely need to hold off saving and investing for the kids. Retirement investing is the non-negotiable foundation for any sound financial plan. It is something that we should all be doing throughout our entire careers(even if you can only manage 3 or 5%). If you are not putting much away now, that's fine. However, what you need is to know how much you need to put away, a plan to increase that % contribution over time, and a multi-year plan to know when you'll be able to invest for retirement and put something away for the kids.
I know we all want to give our kids the best in life, but I'm telling you now-- your kids will thank you for having your financial act together.
To your wealth-building,
P.S. If you feel an emotional block around prioritizing your financial health over your kids, please register for my "Master Your Money Mindset" masterclass on 5/20. We'll spend 90 minutes together improving your relationship with money so you can start taking action. Register here.
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