What Will YOU Leave The Next Generation?

(Guest post by William Cowie)

I had the honor of meeting J. Money at FINCON in Denver. He recently became a dad, and I was thinking about that one day when Greg, a good friend of mine, called. Not very happily, I might add.

Greg’s oldest son drove his car home one evening. He saw the temperature gauge rising, but kept driving, blowing the engine before he got home. “What were you thinking, Son?” Greg asked after the dust had settled. “I dunno, Dad. I just hoped I could make it home.” He also had no idea this was a $2,000 dunno.

As Greg talked to his son, he realized that he had never taught his son what to do when he sees the temp gauge climb. Seems pretty basic to us, but how is a 19 year old kid going to know if someone doesn’t tell him? This is not something one picks up by osmosis. His son certainly didn’t have any desire to do damage to the car but he simply didn’t know how serious (read: expensive) that temperature reading was.

It’s easy to miss things that seem obvious to us, especially when it comes to passing on wisdom to the next generation. Wouldn’t all of us like to leave the world a better place? What are we actually doing to make that happen?

The True Legacy

My parents were as middle class as middle class gets, but they were frugal to the extreme. My mom’s still alive (to the ongoing pain of every penny that passes through her hands). So I haven’t actually inherited anything yet, but I know when the time comes they will have left something for us in the material realm.

However, it’s not the material possessions they leave that define my parents’ legacy. It’s the values, the examples, the coaching in actions… Both my parents and in-laws instilled great values in my wife and I. By setting an example, but also by explicit coaching, too — with their words.

Debt Is Nothing Other Than Impatience

Both sets of parents never had credit cards, but that wasn’t all. They took great plains to explain why saving beats debt. Debt is nothing other than impatience. If you’re going to take two, three or four years to pay for something, why not save and buy it for cash? The only difference is when you get it. And waiting reduces the price by a lot.

My parents saved for years to buy new cars, each of which they then kept for at least ten years. My dad still drove his 1958 VW bug twenty years later. Never mind that the paint was faded and he had to park it with the wheels to the curb. He also didn’t care that it was murder on a teenage boy’s ego. I was on him like white on rice to get something a little cooler to salvage my reputation. A few reams of glossy brochures for cool new cars found their way onto his desk. He was unfazed. We were stuck with the bug. “It gets me where I want to be, and I need nothing more than that.”

Not Caring What Other People Think

Not caring what other people think is also a big part of smart financial living. We were taught that, and we saw our parents live it out. A few posts made the rounds recently about the awkwardness of friends extending invitations which involved non-frugal spending. Those invitations are challenging, and it’s easy to compromise our principles in the name of maintaining friendships. My dad, though, never wavered. Funnily enough, he never lacked for friends, and I had no choice but to notice that. His funeral was one of the best attended in years, because it seems everyone knew him and loved him.

My father in law was a wine farmer, an industry notorious for conspicuous consumption. He didn’t care. When we bought a really nice dining room set (we were young then, haha), his only comment was, “Why would anybody be so stupid to spend all that money for what other people think?”

Our dads didn’t give a fig what others thought of their cars, their clothes or the fact that they never ate out. My father in law once famously said if we wanted to treat him, we should tell him we’re NOT taking him out to eat! He was one of the most popular men in his neighborhood, too. Here were two men who epitomized frugal living, yet each of them was still one of the most popular people around their neighborhood.

I wish I could say I was smart enough to heed all that counsel. Sadly, I can’t say I’m the brightest bulb in the box. But in the end our parents’ words hit their mark. Looking back, I’m grateful, and I’m glad I had the opportunity to say that before my dad passed away. It was a little like in the movie The Blind Side when Sandra Bullock told Tim McGraw, “You’re right.” To which he replied, “How did THAT taste coming out of your mouth?”

Around us I see many acquaintances that were not as fortunate as we were. Their parents never told them about smart money management. All too often parents don’t leave the world a better place for their offspring by not talking the talk, even if they walk the walk.

Watching The Times and Seasons

The biggest thing I learned from my dad is to watch the times and the seasons. Even though he was a low level government bureaucrat at the time, he bought an empty lot soon after he got married. He picked a nice location with a great view, but one that was out of town a ways. He bought it in a down economy, so he got it cheap. Once they paid it off, they built a fairly modest house on the lot, in a recession, when he got great deals from the architect and contractors. Then he focused on getting it paid off. Very simple and very patient.

As it turned out, the location he picked became quite desirable as the city expanded. Nowadays, there isn’t a home under $1 million in their development. (Except for theirs, of course! :) ) But, because my dad looked ahead he was able to get a nice house in a great location for one of the bargains of the century. (Buy and hold really works in real estate, by the way.) The neat thing is he told me about every step: what he did and why.

How About You?

What do you pass on to the next generation? Are you leaving something tangible for their benefit? More importantly, are you leaving them with wisdom they can use for their benefit? Are you actually talking about these things, in addition to setting the example?

Remember Greg. He modeled good care of his cars, but his kids didn’t even notice. The reason they didn’t notice is because he takes good care of his cars and they never break down. So for his kids taking care of a car is a non-issue, much like property taxes and health insurance. It’s “just there.”

When you do things right, odds are your kids and relatives simply won’t notice it. If we assume they will simply pick it up by osmosis, well, we all know what assuming does. Needless to say, Greg has talked with his other kids about what maintaining a car means and all is not lost (other than that ouch of $2,000).

Are you inspiring the next generation to manage their money smartly? Life requires many skills, and managing money is a big one. How are you actually coaching the next generation?

William Cowie is a retired businessman spending his time coaching everyone who wants to listen about managing their money on his Drop Dead Money blog. You can pick up his free course on managing the economic cycle at www.dropdeadmoney.com.

(Photo credit: Wikimedia Commons)

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  1. Lance @ Money Life and More September 20, 2012 at 7:12 AM

    I don’t know if I want to pass down money and material possessions yet but I do hope to pass down some knowledge. I already share this information the best way I know how and hopefully people can learn something from it :)

  2. William @ Drop Dead Money September 20, 2012 at 7:21 AM

    All you’ll have to do is have your kids read your blog, right? :) Unless by that time blogs have gone the way of the 8 track…

  3. Michelle Saint-Germain September 20, 2012 at 7:32 AM

    Hi William!,
    I’m a Freddy Fan too.
    Great post–particularly for people like me. I’m a grandparent with temporary custody of grandchildren.Their mother is in a rehab facility for addictions. Their father, our son, has done everything wrong in the financial planning department. He’s one of those impatient ones. So I know my influence is important for the little ones. One thing I’m doing for the seven-year-old is something I call the point system. When she helps her Dad with the household chores like folding laundry, doing dishes, going beyond the usual, I give her a point. When she earns 100 points I told her I’d buy her a scooter. I’ve never seen so much enthusiasm to help around the house! This system is teaching her delayed gratification, positive reinforcement, and building her confidence at the same time.
    You are so right–we need to leave more than money to the next generation. What a great reminder!

  4. Greg@ClubThrifty September 20, 2012 at 7:35 AM

    Debt is nothing more than impatience. I love that, and I agree that it is true. Debt means you simply didn’t have the patience to tell yourself “no”. You never really need anything so bad, except possibly a house, that you should ever have to finance it.

  5. William @ Drop Dead Money September 20, 2012 at 7:46 AM

    Thanks, Greg – learned that from the late Larry Burkett. It changed my life. And agreed on the house thing, too.

  6. Mrs. Pop @ Planting Our Pennies September 20, 2012 at 7:48 AM

    My sister and I were talking last night about some of the things that we learned growing up – but unlike you, we learned from many of our parents mistakes and poor decisions. Unintended lessons, I guess. We don’t want to feel stuck and trapped by years of bad decisions and not thinking long term. It’s actually kindof funny that we had never talked about that until last night even though we shared bunk beds for 15 years.

    I’m glad you had such great examples to follow. I hope that if we ever have kids we’ll provide them as well.

  7. William @ Drop Dead Money September 20, 2012 at 8:10 AM

    Not just the examples, Mrs. Pop, the words, too. THAT’S what Greg paid $2,000 to learn :)
    It’s great that the two of you were able to break out from under poor decisions modeled by your parents!

  8. Mysti September 20, 2012 at 8:39 AM

    My parents didn’t teach me squat. They let me fall time after time, and it was all my fault. And my parents are so self absorbed that I am sure when they pass, there won’t be much there…why give it to someone else when it can be all about me!!

    I have no idea where I learned what I know. And I am making sure I am passing that on to my children. I refuse to raise children with no common sense and are so helpless that they just sit there.

  9. Katie September 20, 2012 at 8:52 AM

    I love that phrase – debt is nothing other than impatience. So true, and something we need to teach our kids.

  10. Chris September 20, 2012 at 9:14 AM

    My dad is much like Greg in your story. I remember I waited too long to change my brakes and it ended up sounding like I was always braking on gravel. My dad was PISSED when he found out. But much like Greg’s son, I had no idea! We’ve since gone over many life lessons we skipped out on during my childhood. A little backwards but I’m certainly grateful to get a crash course before I have to learn the hard way. That little effort of fixing something WITH you instead of FOR you makes a huge difference:).

  11. William @ Drop Dead Money September 20, 2012 at 9:21 AM

    Mysti – good for you to up the parenting standard!
    Katie – thanks for the kind words
    Chris – yep, it sure is much better to have the fixing WITH, and better late than never! :)

  12. Stephanie September 20, 2012 at 9:22 AM

    As much as I do hope to be able to leave a nice little monetary inheritance to my child(ren) after I die, I definitely agree that financial wisdom is even better. I’m incredibly grateful that my parents passed those values on to me, and when it comes to money my husband and I hope to raise our kids in a similar manner. Specifically: if they want to get a new toy (or some other non-essential), they would have to put it on a birthday/Christmas list or save their allowance. If they want to save money faster, they can take on extra chores around the house.

    When my parents did this with me, it taught me about delayed gratification and planning ahead, and thus far the only debt I’ve taken out has been the kind that has benefitted me financially – a mortgage with payments lower than rent on a comparable property, grad school loans that have increased my income by significantly more than amount of the payments, and as much as I haaaated taking out a loan for my car, I know that a newer car that will last me 10+ years is a better investment at this point than a beater that will need to be replaced in 4 or 5 – thus giving me ample time to save up to buy my next car in cash!.

  13. Kim September 20, 2012 at 9:37 AM

    To echo the others, I love that phrase “debt is nothing more than impatience.” I will be adding that to my toolbox, especially as I am working with our teen youth group at church this year. How blessed you are to have had the lessons you did, even if you went your own way at first. :-) Your parents and inlaws sound like very wise and loving people.

  14. William @ Drop Dead Money September 20, 2012 at 9:53 AM

    Stephanie – good point about the car. The key, though, is to actually have a separate account for that, else it’s too easy for us to pretend it’s there and then use it for something else that comes up. Kind of like the envelope system on steroids.

    Kim – thanks. Be interesting to hear those teens’ reactions to the concept of delayed gratification! :)

  15. Greg@ClubThrifty September 20, 2012 at 11:25 AM

    By the way, thanks for the link William! I just noticed it a few minutes ago:)

  16. Joe @ Retire By 40 September 20, 2012 at 11:28 AM

    I’m planning to pay for his college education and that’s it. :)
    Well, I’ll try to teach him about finance, car, and other DIY stuff.
    Good point about having to be explain things to the young guy.

  17. Jason @ WSL September 20, 2012 at 11:46 AM

    Really great story and points, William! Thanks a LOT for sharing. I’m with Lance in that I don’t think we’re going to be passing along any money to our children as I’d much rather give it to people that need it. What’s truly important to pass down is knowledge and values.

  18. Econowiser September 20, 2012 at 12:14 PM

    Great story! I am not sure about the question yet. We would like to start “a new generation” soon and I am already talking to my husband about how we’re going to educate the kid(s) financially. We kind of disagree. Do we make them make mistakes consciously and have them experience those or do we warn them up front? Well…we don’t have to agree just yet…

  19. Jenna, Adaptu Community Manager September 20, 2012 at 12:32 PM

    I’d like to think I’m teaching my younger brother how to value money and time right now while he is living with me. Other than that just trying to live the testimony that God will provide.

  20. William @ Drop Dead Money September 20, 2012 at 1:04 PM

    Econowiser, I don’t think you have to worry about who’s right. you’ll probably get to do both and here’s why: You will teach them, they’ll ignore you… and then they’ll learn from their mistakes. Voila – both approaches in action!

    Don’t ask me how I know this! ;)

  21. William @ Drop Dead Money September 20, 2012 at 1:09 PM

    Joe & Jason: Did you hear what Warren Buffet said about this? He said he didn’t want his kids to benefit from what he called “the lottery of the womb.” So I think he’s leaving them only like $1 million each. Sounds like your approach, but with a Buffett twist :))

    Here’s a tragic story of the alternative: http://bit.ly/BWBusch

  22. Jacob @ iheartbudgets September 20, 2012 at 3:58 PM

    I’m definitely going to pass along money, but it the values and lessons that will help guide that money after we’re gone that will really make an impact. I’m excited to teach my kids about EVERYTHING I possibly can, especially how to steward the gift of money. They can do more good with it that I can when I’m dead :)

    But it doesn’t mean I’m dumping a pile of cash on them with no rules around it when I kick…

  23. shey September 20, 2012 at 7:27 PM

    great topic.

    Im 20 years old and though I have no Idea how I found finance blogs, but am so happy I did.

    My parents taught me/is teaching me nothing about finance, so I’m lucky to have access to this information. I plan on teaching my future kids everything I possibly can about money and hopefully leave them some inheritance also!

  24. J. Money September 21, 2012 at 11:05 AM

    Thanks again, William! Good good stuff here, always important to be reminded of what we’re doing here on Earth… It’s too easy to get caught up in the day-to-day stuff and forget to think bigger picture. Especially when kids and learning is involved :) To answer your question I’ll be leaving money AND my blog to all my kids, haha… maybe I’ll force them to read one post a day and then start writing for it ;)

    (And PS: Totally about to tweet out “Debt is nothing other than impatience” – So true!!)

    @Michelle Saint-Germain – Thaat point system is awesome!! I might have to copy that myself when our baby’s old enough to start doing things around the house… or, can even walk and talk for that matter, haha…
    @Mrs. Pop @ Planting Our Pennies – I think it’s funny too :) I guess during different phases of our lives certain things become more important? Like money and responsibility? Growing up the only thing my brother and I talked about (while also sharing bunk beds) were girls and sports, haha… sprinkled with baseball cards ;)
    @Mysti – That sucks to hear :( I’m gald you’re adament about your own kids and teaching them well! You can start the awesome legacy trend! :)
    @Stephanie – Your chores/allowance idea reminds me of my own growing up when I wanted a Nintendo Gameboy :) It tooke me mooooooooooonths and mooooonths to finally save up for that crazy thing ($90 back in those days), and by the time I actually HAD the money – I think 1 year later? – it wasn’t worth it to me anymore. So I ended up saving it all, haha… funny how your mind changes once YOU have to front the money ;)
    @Econowiser – That’s an interesting dilmna for sure. I’d probably say a little of both :) Which will probably happen whether you want it to or not, haha… you KNOW that they’re not going to listen to 50% of the stuff you say, so half the time they’ll be smart, and the other half they’ll go and get into trouble and then report back for the lessons learned :) (ACK! Just went back and saw that William said pretty much the same thing! Haha… great minds!)
    @Jacob @ iheartbudgets – “They can do more good with it that I can when I’m dead :)” – Indeed!
    @shey – Awesome! Welcome to the land of finance blogs and nerdness ;) 99% of everything I learn now comes from either readers of this blog, or from reading others out there. So I’m glad you’ve found us!

  25. Tubby September 26, 2012 at 12:51 PM

    I agree with all you have said and I fear, in some respects, for this young generation. The reason is that their parents were raised in the times when credit was a way of life and frankly, even governments encouraged it.

    In other words the parents of many kids today were raised in a time when it was popular to borrow two years wages in advance so you could have things you didn’t need now. Let’s face it, consumerism in the past created desire, and credit was simply a sure fire way to get the sale and nobody was thinking about the consequences, and it seems to me very few were taking a sensible approach to financing.

    So if the parents are of the kind that was raised in an “I want it and I want it now!” attitude, what message may they be giving their kids? As we all know, times have changed, and credit is not so easy to come by although not hard enough if you ask me.

    Let’s hope that these economic factors start to educate people and that young people today will get back to not being so demanding, and consequently, possibly giving themselves a life time of paying back for things you didn’t need in the first place.

  26. Adam Hathaway October 7, 2012 at 9:21 AM

    What a nice tribute to your dads. Even as early as a year ago I would say that financially I was not setting a good example. However I would like to think that I have turned that around. That has not gone without its bumps. We are in a great place now and in a better position to teach our children.