I am so thankful, always, for my three children. They continue to inspire me every day. As a financial planner, it is amazing how many excellent financial planning questions come from these three kids of mine. Their questions range from quirky to practical to existential. As a mother and a planner, it is so nice to feel that I have something to offer them. And as the circle goes around, I find again and again that my children have so much to teach me.
My youngest, still a teen, says: "I want to invest my birthday money in virtual currency".
My first reaction is no, don't do it! Then I think a bit and suggest: do more research. What are all of your options? Why do you want to invest in this? Consider the fundamentals and the risks of the currencies you are interested in. Are you willing to take the risk of losing big for the chance to possibly win big? While I am skeptical of the investment my child is intrigued by, the topic led to a great conversation about investing in general and gave me a chance to talk to a high school student about modern portfolio theory!
My middle child, very early 20s: "Can I make a life for myself without going to college?"
This is, for me, an existential question. When my children were all babies I imagined that they would all three, of course, go to college. Now that they have each grown up, I see that talents, skills, inclinations, passions do not always go the way that parents imagine. This is not a question with an easy answer. The journey toward economic stability, personal fulfullment and finding one's path is a long and sometimes difficult one.
My oldest, finishing grad school, first "real" job: "What do I do with my 403(b)? What is a 403(b)?"
This is a question that falls into my comfort zone. I love that my kids bring me out of this zone on a regular basis, but I also relish in the opportunity to really know how to answer a question! A 403(b) is a type of retirement plan, very similar to a 401(k) plan, but a 403(b) serves primarily government and non-profit employees. It is a way to set aside money and not pay income tax on it right now, save it up for years and not pay tax on the earnings while they grow. You do eventually pay taxes on it, when you withdraw the funds, after you retire. What to invest it in depends on a number of factors: how long do you have until you retire? What other sources of income will you have when you retire? What are the available investment options in your current plan? There are more questions, but those are a good start. Once we answer those, we begin to explore the difference between stocks and bonds, mutual funds and annuities, risk and return. What fun lies ahead!
Every time I have a chance to talk to my kids about money (or anything at all), I am amazed by what they know, what they don't know and the questions they ask that make me think deeply about what I know and don't know. I am thankful for their great questions, their drive and their curiosity. The answers do not all come easy, but they do come with patience, effort and teamwork.
Jennipher Lommen is a Certified Financial Planner TM and Enrolled Agent who offers comprehensive financial planning and tax advice to clients in Santa Cruz, CA and beyond.