This Holiday Season “Lets Have The Conversation!”
We live in very distracting times. Distracted by the internet, social media, television and movies – we move from day to day oblivious to reality and distant from the spiritual.
When last did we have a profound conversation? When last did we listen to our children? When last were we mesmerized by a Drakensberg stream? And when last did we not have a cell phone in the pocket? Silence is the womb of contemplation and wisdom. We need to re-assess our situation and rid ourselves of excessive disturbances.
Have we prepared our children for this new world? Are they able to manage their personal financial affairs?
Sadly children who are relatively well off, take most things for granted and are particularly ill – prepared if something were to happen to their mother or father. Have you discussed this with your children?
The cobbler’s children have no shoes and I must admit that even as a professional money manager with four children I have not prepared them to handle their affairs. This should be of great concern.
Our children need to understand concepts of capital management, the privilege of work, savings and the Christian demand to help those less fortunate than themselves? Do they have a sense of purpose? Do they live life on purpose?
We need to help our children set goals and objectives. They must move out of their comfort zone and aim higher and plan for their futures based on probabilities and possibilities. We must explain what would happen if they suddenly lost those who look after them. Who would pay the accounts and where would the money come from?
Parents need to make sure their wills are up to date and that specific wishes are set down clearly.
On the death of a parent or provider it is easy for a sense of panic to set in. Often decisions are made in a hurry. Assets are sold and long term plans abandoned. This should obviously not be the case. Hopefully life insurance proceeds will help provide the much needed liquidity and savings accounts and emergency cash resources need to be available. If we teach our children now, they will be able to manage this transition. They must know where the will is kept and who to ask for advice. They may need to pay for this advice. Paying for good advice is not the problem – finding good advice is! Explain to them the need to educate themselves financially. In most countries – perhaps even more so in South Africa – it is now very hard to accumulate capital.
Governments are desperate to increase the effective rate of tax imposed on their citizens. Death duties and capital gains tax and Vat are just some examples. Our leaders are faced with the extremely serious problem of an ever ageing population and almost unlimited demands for social spending. This sad reality makes it even more important to make sure your finances are in order. Our children need to, firstly, invest in their education and add to their “personal capital”. Working to further their education and refining new business ideas is most important. They should develop their own business and any excess or surplus cash flow needs to be invested in long term growth assets – preferably shares – ideally listed on two or more stock exchanges to provide worldwide diversification. Do not limit yourself to any one industry, currency or country.
If you are financially competent you can spend less time worrying about money and more time on what is really important. As Gary Player famously said “The harder I practice the luckier I get”. Work hard and be careful out there!