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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to how to retire on time, a show that answers your retirement questions. Say goodbye to that oversimplified advice you've heard hundreds of times. This show's all about the nitty gritty. Now that said, remember, it's just a show, not financial advice. It's educational.
Mike:So do your research. As always, text your questions to (913) 363-1234. Again, (913) 363-1234. Let's dive in. David, what do we got?
David:Hey, Mike. I want to help my kids now while I'm alive. Do you have any dos and don'ts when it comes to financially helping your kids? We're talking about adult kids here or kids that still live at home or both?
Mike:What are they called now? Twenty to thirty year olds are emerging adults. They're not adults. They're emerging. And you look back, it's like, oh, that kid was 18 years old.
Mike:This is back in like the thirties or forties.
David:Yeah.
Mike:And they like owned their business, had five kids. I'm being facetious here, but yeah. Things have shifted. The coddling of the American kid has destroyed a lot of what we are. The unrealistic expectations of how life is supposed to be has destroyed an entire generation.
Mike:And to put it one step further, the idea that everyone is entitled to success and comfort, nope. Yeah. You gotta earn it, and things will continue to get more competitive. They will continue to get more difficult. If we kept all of our jobs here, never did in this global economy, it would have been a lot easier, but we didn't.
Mike:We took as many jobs as we could, and we outsourced them for cheaper labor, which brought the cost of goods down, which has artificially manipulated inflation or the cost of living in our country, and now it's getting more and more difficult. So my opinion, backed by a lot of research, which I'm happy to share maybe at another time, is look at the behavior. Okay? If the kid went to college because they just wanted a good job, but they studied some arbitrary thing and never could explain how they were going to get out of it, that's either on you or on them or on both of you. But what's the behavior of the kid?
Mike:Do they have a sense of entitlement that they're supposed to just get a job and that job's gonna pay them $2,300,000 a year doing, I don't know, some arbitrary philanthropic work in the middle of Africa. Well, that doesn't make economic sense. So the reality of all of this is pain, the hardship that your child is experiencing could be what they need to adjust their behavior so that they move into a healthier position that allows them to live a healthier, more sustainable life. Here's what I mean. When parents pay off their kid's credit card debt, what you're doing is you're taking away the pain that they need to learn how to manage their money.
Mike:The same is said about weight. And I know people, oh, you know, we don't fat shame people. I'm not talking about fat shaming anyone. Oh, well, different genetics. Yes.
Mike:I get there's different guess what? Life's not fair. We all come from different backgrounds. We all have a different amount of IQ. We all have different skill sets.
Mike:We all have different behaviors, different personalities. You can't change that. What you can change is the simple fact that if you have a calorie deficit, that you're going to be able to lose weight. Mhmm. You wanna do it in a healthy way, but is that comfortable?
Mike:No. It's not comfortable. If you have credit card debt, you don't just maintain your spending and it magically disappear. You have to have a spending decrease to pay it off. That is the best medicine you could have.
Mike:And if it takes them two, three, four years, good. I'm not being harsh. I'm talking about behavior. This is a simple framework. Write it down, or if you're in the car, just listen to the show later on.
Mike:Find us on YouTube or a podcast or wherever or retire on time.com. But your history is going to shape your habits. Your habits are your behavior. Behaviors are your the patterns of your actions that will then shape your habitat or the reality that you you exist in. So if you have a history of parents paying off credit card debt or parents providing for you, your history is going to shape habits of unrealistic spending behavior, which will not create a sustainable habitat that they'll be able to enjoy for the rest of their life.
Mike:So one of the worst things I think parents can do is pay off credit card debt for their kids.
David:Mhmm.
Mike:Now maybe you help them with some student debt. Yeah. I gonna ask that. You encouraged them to get in there, and maybe you didn't help them along the way, but, you know, I get that. A lot of people were lied to thinking that college is your one solution.
Mike:All you go to college, you get your degree, and then there's your jobs are lining up for you. It's not that way anymore. Mhmm. Yes. Engineering jobs, STEM jobs.
Mike:Yes. Doctors need to go to school. Please, doctors, go to school. Yeah. I like the fact that you're highly educated.
Mike:Yeah. But maybe question certain ways of going into tech. Maybe a technical school is a better way to get into tech, and then you go and get your bachelor's later on after you're already earning some money into tech. If you can even get into tech because it's more and more difficult because AI is replacing a lot of the entry level jobs. People going to the finance, this might sound scary because we're a financial practice.
Mike:Uh-huh. But I think people who wanna get into finance, for example, should get a job in finance first, get their licensings first, learn from experienced advisers, and then go back to school so that it's a better, more productive experience.
David:Uh-huh.
Mike:You're not just checking off the box. You're learning, and then you're learning even further, and you're applying it, and it's a better refining experience. Get your associates. Yes. Get that right now.
Mike:If your high school allows you to get your associates at the high end of high school, do it. Then go make some dumb mistakes in life. Go travel the world, whatever. Get that need out, whatever that is, but focus on the skill set. Marketers, go get a marketing job.
Mike:Get an internship. Just get the experience. Learn the skill set, and then later on maybe consider going to college if that makes sense.
David:Right.
Mike:There's a lot of people entering the workforce. They can't even get a job. Maybe question parts of the old system, how it's shifting now, but paying off debt, creating a codependent relationship with your kids hurts you, and it hurts them. They need to learn first to become independent, and then they can grow from there. You cannot solve their problems because their problems are based on their behavior.
Mike:Their behavior is the number one indicator, in my opinion, of their habitat, their lifestyle, their results, what they're gonna look like moving forward. You can't learn for them. You can't force lessons on them, but coddling or solving their problems or taking away the pain takes away what they need to be able to learn. If humans were rational, we would not have any of these issues.
David:Mhmm.
Mike:But we're not. Yeah. I hear people come in the office and say, well, we're help our kids out. Great. Help them get into a house.
Mike:If they're working hard, they're spending less than they make, and they're just trying their best. Notice the behavior is congruent with healthy financial decisions, then, yeah, help them get into a house. Help them speed up their college payoff. Help them maybe have a little extra for the grandkids' education, but that's fine. But if you're helping your kids financially and they're getting $80 appetizers at the local steakhouse to celebrate some arbitrary feel good moment, do not help them.
David:And it might be hard to not help them. Right? They're your kids, and you wanna help them.
Mike:Yeah. But just like if you want to become strong, you have to experience pain before you get the result of the strength of the muscles. If you wanna have grit, which people need grit, look at Angela Duckworth's research on grit and how you need grit in order to handle life. You have to go through difficult situations to learn how to have grit.
David:It seems like a lot of this is lacking, and I don't know if it's just our American Western society or what, but we're not as in the middle here on this. We're over, I don't know, compensating over coddling.
Mike:Yeah. You wanna reward good behavior, not take away from pain. Yeah. So my son, he's doing little league basketball right now. He's five.
Mike:And the whatever the not agency. What what do you call sports association, whatever, for the kids? Yeah.
David:Like a little league.
Mike:Yeah. Every week, one kid gets a trophy regardless of what they did or the outcome. Just a random kid is getting a trophy, and at the end, everyone gets a trophy. Yeah. That is so dumb.
Mike:Here's why it's dumb. You're gonna get a trophy randomly whether you deserved it or not. And the times you do deserve it, you don't get a trophy or you're not celebrated at all. There's no individual pursuit and collective team pursuit. It's just this arbitrary, hey.
Mike:Let's just randomly celebrate and focus on one person and celebrate them because they exist. Yeah. That's so dumb. And we know it doesn't work because the trophy mentality that we tried in the nineties and two thousands has destroyed, and we have the research to prove that. So what do they do?
Mike:They're now celebrating one kid instead of every kid. It's just repackaging the same problem. And the same thing happens. Oh, let's let's celebrate people. You're special.
Mike:You probably are special, but did you deserve the reward that you got? So my son's crying at the end of this, and I said, well, what did you do to deserve a trophy? Yeah. You didn't score. You didn't steal.
Mike:In fact, you were actually at the end of the court dancing. You weren't even looking at the basketball. So how in the world do you deserve a trophy? He says, well, they got a trophy, and they didn't do anything. I said, yeah.
Mike:The whole function's wrong, but you wanted an attaboy next week? So here's what we did. This was really funny. I said, alright, Judah. If you can get two steals and one rebound, I'll give you an ice cream sandwich.
Mike:Yeah. And you know what he cared more about? He cares more about ice cream sandwiches than trophies anyway. He really wants an ice cream sandwich. Yeah.
Mike:You know what he did that whole game? He was focused. He was at the end under the basket on the right side because that's usually where they go in this league because kids are predictable in how they shoot the ball. They're always, you know, having to go to the right. And he's down there.
Mike:He puts his hands up, and it was so cool. The moment where his hands were up, he was waiting for the rebound. He's five, and the ball bounces and he catches it. He goes, daddy, daddy, I got the rebound. And and there's no backcourt pressure, so the kids all run down.
Mike:It was fine. And he dribbles it. I mean, the moment he earned it though. Yeah. Because the last five times it bounced towards him, he ducked.
Mike:He was scared of the ball, but now he's not as scared of the ball.
David:Yeah. Yeah.
Mike:Yeah. So when you do a line to reward good behavior and, he got hit in the face a couple of times. That hurt. So now he's more aware of his arms. I mean, this is classic.
Mike:How do you reward good behavior and set kids up for success? Don't take away their pain. Right. You can help them with the financial situation. You can help them get into a house or things like that as long as their behavior shows good financial decisions.
David:Can you finance their college? Yeah. You could. What if they what if you're financing their tuition and they get bad grades and they do you No. Is it okay to stop?
David:Yes. Yes. He's alright.
Mike:There's a guy I knew who had basically a written agreement. It wasn't an official trust, but it was a written agreement that said and this guy had a lot of money. So he was an executive at Boeing. And his daughter graduates, falls in love with some beach bum, says, hey, daddy, I want my funds. He says, look at the agreement.
Mike:And the agreement says it was there to pay for college or certain things, and even joked if you wanna run off with some guy, you can't touch the funds. He says, daddy, that's not fair. He says, okay. Well, it's my money, so that's fine. Eventually, the beach bum and her got into a fight.
Mike:They broke up. She went to school, married another guy, really nice man, and I was dating their youngest daughter, so I came to really love the family. Wonderful people. And her life was much better because he held a boundary with civility Yeah. And forced her to have better behavior.
Mike:It is so important for parents to do things like this. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles if you're missing tax minimization opportunities that you may not even know exist.
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