Have you ever heard of a ‘hero’s journey’? Years ago, I read Joseph Campbell’s classic The Hero with a Thousand Faces, which discusses a path of personal growthshared across time and cultures. In it, a hero leaves home, goes on an adventure, encounters a crisis, is taught by a mentor, wins a victory, and comes home transformed. As parents and grandparents, it’s an important reminder that simply offering a helping hand (or an open checkbook) to the next generation isn’t always the best path forward. Instead, it’s often wiser to give them the tools they need to take their own ‘hero’s journey’ and return with a lifetime of wisdom.
I’ve been in practice for many years. As a result, the majority of my clients are older. With age often comes a complex set of financial challenges—retirement income planning, tax-advantaged charitable giving, risk management, and health issues. At the same time, we see our children and grandchildren experiencing their own challenges. Just as their parents did a generation earlier, those in their 30s and 40s and beyond are building a foundation and pursuing careers. If married, they must manage financial realities with a partner (rarely an easy task!). They may have kids of their own to raise and educate. Perhaps they’re struggling to buy their first home. Yet their journey is not like their parents’ was. In many ways, it is wildly different.
For starters, they have more college debt than any previous generation (an average of about $33,000), and more credit card debt (an average of about $42,000—far above the national average of $5,700). They’re also born entrepreneurs (a study by the American Small Business Development Center found that 59% of Millennials say that with the right idea and resources they would start a business within the next year). Many have grown up with the Internet at their fingertips and a smart phone in their hands. And perhaps because they felt the impact of the financial crisis as kids, they understand the importance of saving for the future; 45% of millennials are actively saving for emergencies, 41% are setting money aside for retirement, and 41% are actively saving to buy a home.
But knowing the importance of saving isn’t enough. To reach their financial goals, they need a mentor or guide. According to a recent study by Broadridge Financial Solutions, they’re not getting the advice they need. Sixty-nine percent of millennials reported that they are not working with a financial advisor. Among those who are managing to save and invest, most don’t know what they don’t know, putting their future at risk. For this generation, the time for a financial hero’s journey has come. As parents and grandparents, our role is not to step in and fix their problems, but to prepare them for the journey. It’s time to teach them to fish.
Give a man a fish, and you feed him for a day.
Teach a man to fish, and you feed him for a lifetime.
A few weeks ago, my client Gina put me in touch with her daughter and son-in-law who need help kick-starting a financial plan. In their early 30s, they’re late starters to financial planning. Like many people their age, they have a negative net worth and spend more than they earn. Rather than having someone their mother’s age (yes, that’s me!) work with them, I asked Brittany, our Associate Financial Planner, to step in. Brittany is their age, and she brings lots of financial planning skills to the table (she is a CFP® with degrees in finance, financial planning, and taxation). It was an even wiser decision than I could have guessed. When I handed her their file, her first question was this: “Do you mind if I recommend some Millennial strategies to them?” My answer: “I don’t mind one bit!” (Honestly, I didn’t even know what she was talking about!)
She elaborated before I had to ask. To help them manage their debt, she wanted to set them up on a personal financial management app like Digit, which tracks spending and analyzes income and then uses that data to determine the right amount of money to save, even transferring the amount into savings automatically. To help them supplement their income, she wanted to recommend a tool like Gigwalk, an app that allows users to earn up to $100 a project by matching their skills with the needs of local businesses on a one-off basis. I was thrilled. Brittany had the right tools to offer—tools a younger couple would appreciate and, most importantly, use to their advantage. By showing them how to catch up financially, set long-term goals, and build a wiser path forward, she is teaching them how to fish. She is the ideal mentor to guide them through their ‘hero’s journey.’
When you want to help your next generation succeed financially, resist offering your gems of parental wisdom (no matter how great they may be!). Don’t offer your assets to fund a ‘solution’ (for more on this tricky topic, read my blog post MoneyRules). Instead, allow them to take their hero’s journey of discovery and arm them with tools and resources to help them pave their own path forward—even when it hurts to watch them suffer.
According to Northwestern Mutual’s 2018 Planning & Progress Study
According to data from Ally Financial, Business Insider, January 22, 2019