January 2002

The Most Valuable
Financial Gift

© Talbot Stevens

One of the benefits of successful financial planning is being able to provide financial gifts to those you care about.

Most parents lovingly plan to leave their estate to their children when they pass on. In addition, people often give money to their children or grandchildren to help finance the high costs of post-secondary education.

While such actions are almost always appreciated, there is a financial gift that is much more valuable than money. It relates to the Chinese proverb that says: "Give a man a fish, you feed him for a day. Teach a man to fish, you feed him for a lifetime."

Instead of giving children the money for additional education, it might be more valuable to give them the knowledge, attitudes, and work habits to build their own financial independence.

Despite the increasing complexity of the financial world, children of any age only need to learn a few timeless basics to be able to "feed themselves for a lifetime". They need to know where to find fish, have the skills and tools to catch fish, and know how to store fish for future needs.

After children learn how to acquire money, the next step is to teach them how to keep it, and let it grow for the future. Learning at a young age the habit of simply saving 10% of your income and investing it tax-efficiently allows the magic of compound growth to work for decades. I can't count the number of seminar attendees who have said, "I wish I had learned this 25 years ago."

In many societies, each generation tries to create a better life for the next. Parents often give their kids the "luxuries" that they did not get to enjoy when they were growing up.

While this seems like a natural goal, gifting too much can sometimes produce more harm than good.

Ironically, an individual who faces some "hard" times is forced to learn how to deal with life's challenges, making life "easier" in the future. Perhaps some of what is necessary to teach children to fish is to allow them to be a little hungry, so they develop their own internal motivation to solve the problem.

Since we are generally not taught the basics of money management in school, the most valuable financial gift a parent can give their children is how to create their own wealth. Work hard at what you love. Pay yourself first and invest ten percent of your income. Work with a trusted advisor to follow a written plan for your unique goals.

Of course, saying these things will mean nothing if the teacher doesn't walk the talk. Children learn what they, and their parents, live. One productivity consultant suggests that the best way to learn is to teach others the lessons we need to learn ourselves.

Studies show that most inheritances are gone within five years. To create a legacy that will outlive your children, teach and model for them how to create their own financial independence. In the process, everyone will learn and benefit.

For more information, visit