Family

Retirement plan

Do not Become Someone Else’s Retirement Plan

Money Maroon

No matter how hard you work or how much money you earn, you are only a few bad choices from finding yourself in the poor house. Sometimes, the decisions that we make are in view of perceived obligations. For example, many financial decisions are made in view of obligations to family and friends. On your path to financial independence and early retirement, do not become someone’s retirement plan.

Focus On Your Retirement Plan

As the statement goes, put on our oxygen masks first before the person next to  you, including family. This also applies to your plans for retirement. You may be able to make head way in saving toward your retirement by living below your means, saving, and investing. However, it is also easy for a family member or two to constantly ask, manipulate or steal what you have saved. The stories are easily available if you perform a simply search, and should serve as a warning.

What Is Yours Is Theirs

There are so many stories of an individual or a nuclear family making progress by living below their means, saving and investing over time. As this family rises and increases their wealth, it is only natural for families and friends to notice, and notice they will. We can try all we want to hide success, but others will notice how you live your life. While you may try to be the millionaire next door, your close family knows better. While you may drive the standard car and live in a standard house, your family will be well aware of your job and will likely have researched your salary. It is only a matter of time before assumptions are made with regard to your wealth. With assumptions, it is common for others to begin to think that what is yours is also theirs.

As knowledge of your life is shared by family and close friends, you will be seen in a different light. When financial hiccups occurs, you become their bank. If they are having issues with housing, they will show up at your door. If you do not take steps to stop the initial requests or actions, you will pay for it later.

Of course, the proximity to family and friends will matter. The closer you are to those with a specific personality type, the faster the devolution into others thinking that what is yours is theirs. The further away you are, the less interaction and the less issues you may have.

Blocking retirement plan
Do not allow others to block your financial flow

Reason Does Not Matter

It really does not matter if you and others all had the same opportunities. It does not really matter if you choose to live below your means while others live it up. You may sacrifice all you want to maintain your life and that of your family, but it is simply human nature for those around you to think and believe that what is yours is also theirs. Especially when others believe that you have more than you need or that you do not deserve what you have.

What To Do

The fact is, you must learn to say no. You cannot become someone else’s retirement plan. You must stand up for yourself and your family. Others may claim that you are mean, but you must put your oxygen mask on before others. You cannot find yourself bank rolling other peoples lives, especially if these individuals do not understand how hard you have worked for what you have. 

It is all around us. Others have nice cars, vacations and homes that dwarfs the size and costs of yours. However, these are the first to reach out for aid and have a deep seated belief that what is yours is theirs. When times are hard, why do you have so much and they have so little, even though when times were good they had more than you and in effect wasted it.

We are not saying that you should be selfish and not help others. Help others and give. Success is not achieved alone and in isolation. What we are saying is, know what you are doing. Know the consequences of your actions. Know what saying yes today will mean for tomorrow. Do not become another person’s retirement plan. Know when to say no.

Conclusion

No matter how hard you work or how much money you earn, you are only a few bad choices from finding yourself in the poor house. Sometimes, the decisions that we make are in view of perceived obligations. For example, many financial decisions are made in view of obligations to family and friends. On your path to financial independence and early retirement, do not become someone’s retirement plan.

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Family and money

Family Finance: Talking To Your Family About Money

Money Maroon

Money is a difficult subject to discuss. Some would rather discuss their weight instead of talking about money. When you have to share financial information with family members, the money talk is taken to another level of pain. When you are discussing money with your parents, the money talk may be excruciating. While painful, family finance discussions are important. Do not avoid or delay talking to your family about money. Talking to your family about money may alter not only their financial future, but also yours.

History Of Retirement

Retirement, generally, was not made for the masses. German Chancellor Otto von Bismarck invented the idea of retirement in 1889. At the time, retirement was essentially to force older workers out of the work force and make way for younger workers. However, in Chancellor Otto von Bismarck’s 1889 Germany, the retirement age was 70, but most importantly, the average life span was 70 years of age. 

As health care and medicines improved and we began to live longer, retirement and our understanding of retirement has evolved. Now, retirement is not only for those close to death, but for anyone who have achieved financial independence and want to escape the rat race.

The Three Legs

Generally, in the United States, with the advent of social security, previous generations were somewhat secure in retirement. Previous generations had the now acclaimed three legs to their retirement stool: (1) personal savings, (2) social security and (3) a company pension. However, the three legs have been significantly weakened or are completely non existent for many.

The baby boomer generation will be the first generation since world war II to enter retirement without all three legs. 

First, many have very little to no personal savings; second, as it currently stands, the social security program is teetering on the edge of insolvency; and  third, for the most part, company pensions are a thing of the past. Taken together, the baby boomer generation have little saved for retirement, no pension plan and are dependent on social security.

Are your family members, prepared? A more direct question, is your mother and father prepared? If they are prepared, lucky you. If they are not, who will be taking care of your parents in retirement? Look into a mirror and the answer will be looking at you.

How will this impact your financial future? With this in mind, have you had the talk? This is the reason family finance discussions are so important.

Family Finance: Talking To Your Family About Money

– The First Talk

I have personally tried to have the talk with my parents, the first attempt did not go very well. However, I understood that family finance discussions were important, so I tried again.

Imagine your child asking you personal details about your financial situation and questions with regard to end of life planing? Imagine your child then critiquing your choices and then showing you that you have not saved enough, imploring you to cut back on spending and put more money away? Your child then warning of the dangers of running out of money in retirement, the high costs of healthcare as you get older, and the importance of being debt free prior to retirement?

Would you be defensive, would you hide information? Of course you would. 

– The Problem

First, this represents a huge roll reversal that not many parents can handle. Your child is now being the parent. If your parents are from the camp where they speak and the child listens, such questions will evoke anger and a feeling of being disrespected.

Second, based on answers or lack thereof to the questions asked, both parent and child now know that in the finance department, the parent is not as all knowing as they may have represented to be over the years. These questions will expose financial mistakes and missteps. Acknowledging these errors of judgement and missteps to a child can be very difficult for some parents to handle.

The above are only two of the many reasons why it is so difficult to talk to your family about money.

– Perseverance Is The Key

Did I stop talking to my parents about their finances when I was rebuffed? No. Did we have yelling matches when points were not getting across, yes.

To ensure that your relationship is not destroyed because of your discussions, spread out your discussions. Continue to ask questions that were not previously answered. Over time, a funny thing will happen. Instead of having to ask questions, your parents will begin providing updates on their financial progress.  I am not saying that you will have a miraculous breakthough and your parents will become the most responsible with their money and make all the right financial choices. Instead, they will become more aware of their financial situation and start thinking more about their financial futures.

We cannot control what another person does, especially our parents. However, if we can make them aware of potential issues that may be on the horizon, maybe they can and will take action to change course. 

The fact is, you as the child may be responsible for your parents during retirement. Begin taking steps to mitigate the impact on your financial future by talking to your family about money. Have the family finance discussions.

Conclusion

Money is a difficult subject to discuss. Some would rather discuss their weight instead of talking about money. When you have to share financial information with family, the money talk can lead to an unbearable amount of pain. When you are discussing money with your parents, the money talk may be excruciating. While painful, family finance discussions are important. Do not avoid or delay talking to your family about money. Talking to your family about money may alter not only their financial future, but also yours.

Talking to your family about money is one of many stops on your journey to financial independence. Have the talk.

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