How to engage your next gen around finances - Day 4

Written by: Josh Arrington

Day Four is all about the future and financial planning!  This is an opportunity to not only talk about dreams and goals for life, but also to discuss a huge issue that younger generations today are often accused of not understanding:  Delayed Gratification.  It is also an opportunity to share your future plans and dreams with your children.  As I walked through this with my boys, I was honestly surprised at how little they knew about what my wife and I want in the years to come.  It has turned into a series of discussions rather than just one conversation, and has been really fun to talk about together.


day  4 - The Basics of Investing


Goal: Explain the importance and benefits of having a comprehensive financial plan and provide some steps to successful plan for future financial success.


I. What is a Comprehensive Financial Plan? 
Basically, a comprehensive financial plan is a detailed roadmap on how to get from where one is financially today to where they want to be in the future. A good plan addresses every aspect of the financial picture and not just investments.  Such a plan is beneficial in illustrating how financial decisions and moves in one area of life will affect goals and decisions in other areas of life.  Such a plan creates great clarity on the various financial goals a person may have, helps to prioritize those goals, and provides clarity on steps that need to be taken to reach these goals.


Take a few minutes and have your children make a list of various financial goals a person my have.  A few possible examples might be:

  • Retirement plans
  • Personal education funding
  • Education funding for children
  • Large purchases (homes, vehicles, recreational equipment)
  • Desire to give charitably
  • Emergency funds


II. What are the Benefits of a Comprehensive Financial Plan?

The benefits to a good plan are numerous, but three clearly stand out. First, a plan requires being very clear about the various financial goals a person or family may have in life.  Yogi Berra (not Yogi Bear) once said, “If you don’t know where you are going, you might wind up someplace else.”  Generally speaking, goals in life are only achieved when they are clearly defined.


Second, a financial plan uses historical data to project and create workable and detailed steps needed to achieve goals.  One will not get where they want to be financially without making appropriate sacrifices, good decisions, and taking proper actions along the way.


Finally, a financial plan provides a personal measure to determine the impact of volatile markets.  This has certainly been massively needed and beneficial in recent weeks as the markets fluctuated in response to COVID-19.  A recent Schwab study revealed that only about 25% of American adults have any form of a written financial plan, much less a professional, comprehensive plan [1].   Combine that with the American Psychological Association’s finding that individuals with a financial plan experience significantly less financial stress in life, and it is easy to understand why we have witnessed so much recent panic [2, 3].  When one has a good plan, the measure is not where they are financially based on where they have been or where the markets are moving, but instead on where they are and need to be based on reaching their personal goals.


The conclusion of the impact of a comprehensive financial plan is that any kind of written plan is better than no plan at all.  At the same time, just as we do in many other areas of life (medically, educationally, martially), taking advantage of having well trained financial professionals in creating a comprehensive plan is generally the best possible course of action.


III. How can I start Preparing Financially for the Future? 

There are many important steps that can be taken at almost any age in order to prepare for future financial success, but we want to highlight just a few.

  • Delayed Gratification: My parents used to tell me “you can’t have everything you want”.  Very few people will ever have unlimited financial resources and as a result, most of us must choose between the importance of our needs and wants.  Delayed gratification is simply not fulfilling a current financial want in order to have the money later to fulfill a more important desire.
  • Understand Investing vs. Saving: Both saving money and investing money are needed parts of a good financial plan.  Saving money means setting it aside for future use while not expecting much if any growth in those funds outside of future additional saving.  Investing means setting money and putting it to work through various investments in order to allow the money to grow independent of future additions.
  • Mange your Credit Score: As mentioned yesterday, there are appropriate and needed times to borrow money throughout life.  Having a good credit score is beneficial in keeping the interest (cost of borrowing) on these loans as low as possible.  In addition, credit scores are often used in other areas that affect finances, including determining auto insurance rates.  There are a number of factors that affect credit scores but two important items include length of credit history and regularity of paying amount owed on time.


Discuss opening some form of credit for your children in order to help them start building their credit scores.  This can be done at almost any age, but will require strong discipline and governance by both the parents and children.



Maybe my favorite exercise of this entire series and one that can be beneficial relationally, mentally and physically.  Consider going for a walk or doing some activity while having a discussion with your children about some of your financial goals (including retirement).  Share both your goals and also some of the steps taken to reach those goals.










Josh Arrington is the Senior Business Development Manager of Archetype Wealth Partners. He is energized when helping high-capacity individuals discover their creative purpose and grow to their maximum impact in that calling. Archetype exists to help families thrive across generations.


Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.

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