Investment figures tell us that 72 per cent of adult Americans don’t have enough savings to retire comfortably. (Source: Bankrate, US Global investors). And over 21 per cent don’t have any retirement savings at all!
It’s a troubling statistic. And surprisingly common in many first world countries. So, who is going to foot this bill? Sadly, it might have to be the children. And that will simply perpetuate the retirement challenge for the next generation as they take from their savings to fund their parent’s retirement shortfall.
Parents are often short on retirement savings because they have been supporting their children into their late twenties.
The irony is that the parents are often short on retirement savings because they have been supporting their children into their twenties and early thirties. Student loans, first cars, and even a child’s lifestyle, place a strain on the parents’ ability to save towards their own retirement.
And this creates a dependency on their children to look after them in their later years. It’s commonly known as a sandwich generation where young adults need to fund their parents and their own children, creating an unmanageable demand on them financially.
This cycle needs to be broken so that future generations don’t sit with the same challenges. And there is only one way to achieve that. It needs to start with the children. Creating money-wise children who learn to manage their money and become financially independent in their twenties or even earlier will take the burden off their parents.
Money-wise children who learn to manage their money and become financially independent will take the burden off their parents.
So at what age should parents start introducing the concepts of saving and money to their children?
“The window is zero to seven,” said Guy Shone, research director for the British government’s Money Advice Service. “It’s very hard to reverse those habits later in life.”
Groundbreaking research by Dr David Whitebread and Dr Sue Bingham of the Cambridge University concludes that children’s money habits are formed very early on in life. As Dr Whitebread suggests, “The ‘habits of mind’ which influence the ways children approach complex problems and decisions, including financial ones, are largely determined in the first few years of life. Simply imparting information is now recognised as being ineffective in this area. By contrast, early experiences provided by parents, caregivers and teachers, which support children in learning how to plan ahead, in being reflective in their thinking and in being able to regulate their emotions can make a huge difference in promoting beneficial financial behaviour.”
Being able to regulate their emotions can make a huge difference in promoting beneficial financial behaviour.
And in a world of social media where instant gratification is reaching pandemic proportions, who knows how our children will ever develop the right skill sets to become good with money.
Parents need to be more conscious about the example they are setting for their children when it comes to money. Using the power of story is an effective way to introduce these principles and make these important principles stick. The series of StoryWise Kids picture books is aimed at achieving exactly this, with characters that demonstrate he principles that create good money managers and activities that help parents to create the right saving behaviours. These books are a powerful means of getting this message through to children in an enjoyable way.
The books are also supported by free downloadable tools and tips on the website for kids and parents.
It makes sense to have at least one book in the StoryWiseKids series as part of their early story time reading. The books are also supported by free downloadable tools and tips on the website for kids and parents.
Investing a bit of story time into their financial future is a great investment to make.