This week, Mentoro asks author and speaker Dale Alexander about his tips for parents talking to their kids about money
It can be challenging and intimidating to talk to your kids about money, especially if you don’t know where to start! In this month’s episode of the Bullpen, we sit down with Dale Alexander, experienced financial planner, author and motivational speaker to discuss rules that he thinks every person should follow when it comes to money.
Spend less than you earn
When approaching this topic, Dale began by discussing a few true or false statements that may be surprising to you. The first was “If you look rich, you probably are.” Despite popular opinion, this is oftentimes proven false! Dale said that many people struggle with contentment, and this causes them to overspend and live beyond their means to look rich. The reality is many people who are very financially successful do not spend all their money on fancy cars or obscenely luxurious lifestyles. Did you know that in a recent study, it was found that 3 in 10 millionaires drive an F-150 pickup? Dale’s advice was not to be fooled by appearances and to focus on the financial goals that matter most to you.
The Comparison Trap
It can be easy to fall into the habit of comparing your own accomplishments with those of your neighbor. Looking around at other people’s possessions can lead to a great amount of personal discontent and can lead to a “Keep up with the Joneses” mindset that is not conducive to reaching your own financial goals. Dale talked about this mindset as being a trap that leads people to chase the perceived happiness of others instead of seeking their own joy. His advice is to look ahead towards the goals that make sense for you and your family, instead of looking left and right at your neighbors.
“Future Self Syndrome”
A large reason that people struggle with managing their money and reaching their financial goals is because of a lack of awareness. Dale used an example of when you walk out from your beach chair into the ocean and spend a lot of time out there. Often, when most people turn around to return to the shore, they have not realized how far they have drifted from their original starting place. This can happen when it comes to managing money as well. It can be difficult to know you are getting lost until you are already in a bad place. It takes constant awareness and monitoring to stay on track with your budget and without that thoughtfulness, it is easy to drift away from your original goal. One important question that Dale asked in this interview is, “Why is it that when we are told we should do things, and agree that we really should be doing them, we still fail to do those things?” He said it was due to something called “Stranger Danger” or Future Self Syndrome. He pointed out that often we do not make decisions that benefit our future selves because we view that future version of ourselves as a stranger. Dale’s point is that we need to care more about the version of ourselves 40 years in the future and make decisions today keeping that person in mind.
Dividing your income
Dale had an insightful recommendation on how to divide your income. He said that one of the most important life decisions you can make is to decide to live below your means and decide to allocate a good portion of your income to saving, investing, and giving it away. His recommendation is to save 70%, invest 20%, and give 10% away. His experience is that giving 10% of your money away will reap an immense number of benefits in your life, make the world a better place, and increase your joy. He warns young people that this is a decision that is best made early on in your career because once you start spending 100% of your income, it is very difficult to get down to 70%.
Setting an example
For parents wondering how they can teach their children about these important principles, the best way to teach children is to live out these principles yourself and show them how being disciplined about finances can lead to a healthier and more fulfilling life. Dale shared that his biggest influence and inspiration in becoming someone who is passionate about helping people with their finances was how his parents raised him to be wise about money. More is caught than is taught, so it is important for parents to set an example for their children in addition to teaching them how to be smart in how they use their money.
Your Money Mentor can help you think through the ideas discussed in this video and help you come up with some action items to get you started on putting these practices into place. Visit MyMentoro.com to schedule your 1:1 to take the next step on your financial journey today.