If I had a dollar for every new client who told me that .. “they wish they knew this financial stuff earlier and acted sooner”!
So why do people seek Financial Advice too late and why are their financial affairs in such disarray? Is this something that we can change as a profession?
Over the years as an Adviser (25 years) I have delved into this conundrum and I have some thoughts.
Our first Money Memory:
Have you ever heard about this concept of … “your money memory”. It explains that as children we start to form an opinion of what money is and how we should interact with it from a VERY young age … 7 years old! And again at age 14 years we will look for more clues about money and by age 21 we have our very own ‘money memory’ cemented into our sub conscious.
For example: If, as a 7 year old, you were lucky enough to get whatever you wanted then you start to believe that you should have all you desire. Fast track that 20 years and there may be an adult with lots of stuff but no savings or other assets!!!
Or if you were a child of a poor family and did not have much then you might have a higher value and respect for money in the future and look after it much more carefully as an adult.
What role does our family environment play in this? And is this just in our family environment or at our schools too? My 6-year-old recently came home from school with a new toy and I asked where he had got that from. His reply was “the treat box from school”. I then enquired “what did you do to get something from the treat box?”, he said “I was really good Mum and did all my work”. “Well done, good boy” I replied. But on reflection I now see that this might not be the greatest idea. Simply rewarding him for doing what he should already be doing could manifest into him believing that he should always be rewarded or have treats if he is just doing what he should do. Then almost immediately thought of several clients whom in the past have made that comment … “but I work hard shouldn’t I have what I want” … to their financial detriment! They cannot afford to be indulging all the time for the simplest of achievements. Have we started to get to the bottom of the problem maybe?
Advertising and Social Media
What about advertising and social media! Manipulating us to believe we need the latest this and that and how much cooler, or popular we will be if we ‘just had that’. Is this to blame? And it’s only when we become older and don’t actually care what others think anymore and realise that we have wasted all that money over the years and now we have nothing to show for it that we seek out financial advice.
So, what can we do as Advisers to break this cycle and educate children, and young adults sooner? We need to act NOW and let our clients know that their children and grandchildren are already forming their “money memory” and give them tools to help children on the right pathway sooner. Get into schools at a much earlier age with bright, colourful resources and fun games to play and we need to be advocates for financial literacy for our young people. Do not let talking about money and bills be a taboo subject and encourage open and honest discussions regularly.
We can all do something to educate our next generation on financial matters. I challenge you to work out a plan to be part of the solution.