I’m Handing You the Silver Platter

By Philip O. Johnson, CFP®

Several months ago, a client shared with me a conversation he had with his adult child.  “Everything has always been handed to you on a silver platter,” he told his daughter.  “Now I am giving you the silver platter.  Don’t expect any more.”

My parents were children of the Great Depression, but they didn’t think of  themselves as poor because everyone was in the same boat.  Although I am sure their young minds didn’t fully comprehend the economic stress their parents may have felt, they enjoyed a happy childhood and the security of a close-knit family.

The children of the Depression grew up, went to war, and then started families.  My siblings and I (as the Baby-Boom Generation) have lived during one of the most prosperous economic cycles in world history.  Collectively, we have enjoyed a standard of living that has been unparalleled in any other society.

Soon, we “Boomers” were having offspring of our own, and we lavished even more on them than our parents did on us.  Now, as grandparents, we are seeing our married children struggle to balance their lifestyle wants and needs.

And therein lies the problem—lifestyle expectations are way ahead of income levels and economic reality.  Too many young people and families are trying to live a lifestyle they can’t afford.  This was already an issue before the credit crisis, but a slowing economy and loss of jobs has exacerbated the problem for those who live beyond their means.

The economic status quo has changed.  This global recession may test the notion that each succeeding generation will live better than the previous.  How we survive this recession may be determined by how we adapt to those things we cannot control, and what kind of decisions we make on matters we can control.

As parents and grandparents, this is our opportunity to implement and teach these principles:

Set an example.

Signal that you are “cutting back” on your own expenses, even if you don’t need to.  When it comes to housing, cars, vacations, clothing, or eating out, show your children and grandchildren ways to live well for less, or even do without.

Empower, don’t enable.

An elderly widow client wanted to bail her kids out of credit card debt.  Prior to doing so, she met with me and I asked her the question, “When you and your husband were starting out, would you have ever asked your parents to pay off your debt?”

“Why of course not,” she said, indignantly.  “We always solved our own problems.”

“Then why don’t you give your children that same opportunity?” I asked.

If you feel a need to help your children or other loved ones, make sure you do not take ownership of their problems.  Sometimes, people must hit a low-point before they are sufficiently motivated to make real changes in their life.

Avoid loaning money, if possible, as it often impacts relationships in a negative way.  A gift is often better than a loan because there are no expectations that it will be paid back.

Also, paying something specific (instead of just giving money) is a way of helping someone without it being open-ended.  I like to do this for my own children, when it is not expected, but I can see that it may be needed.  (For example, buying a used car, or a new set of tires, or paying a specific medical bill for someone who needs your help.)

If any of my clients are put in a difficult position by adult children asking for money, I offer my “financial coaching services” at no charge.  I’ll be happy to meet with your children to offer them ideas or resources that may be of help to them.

Choose a home you can afford, not the house of your dreams.

Our community has many beautiful homes filled with people who are stressing over their mortgage debt.  Owning more house than one can afford can wreck a family’s finances very quickly.  If someone loses their job or is behind on payments, borrowing money from others to pay the mortgage generally just prolongs the inevitable.

On the flipside, living in an affordable home is one of the greatest ways to build financial security.  Since housing costs are the greatest monthly expense for most families, a home with a lower payment allows more money for college and retirement savings, investments, and discretionary spending.

Be a positive voice in a negative world.

We have all lost wealth during this economic downturn, and will likely see additional challenges in the months ahead.  But the glass is still half-full.  If anything, this period may help us re-evaluate those things which are of greatest worth.

If your children and grandchildren are having a hard time adjustling to life without the “silver platter,” remind them that silver will tarnish and lose its appeal.  Hard work, motivation, and independence will bring them greater joy in the long run.

I’ve had some couples tell me that during this economic uncertainty, they have grown closer to their extended family members as they have sought to support and encourage each other.

By living sound financial principles, you can be a voice of assurance and a positive influence to those around you.