4 Imminent Financial Blows Facing Your Children

Financial times are different than they were in the past, and they continue to change at a rapid clip. Preparing your children to meet the biggest financial impacts they’ll see later in life is imperative if you want them to experience life on their terms.

The Extended Golden Years

childmillionaire

It used to be 65 was considered old, retired, and on your way out. Now we have 80 year olds running multiple marathons, and the concept of old is decades beyond what it used to be.

The old for your children may be 90, 95, 110? We don’t know, but with that extended life comes a new onslaught of financial responsibilities.

Most American’s today rely on programs like Social Security and Medicare to assist them in their expensive elder years, but those programs are losing liquidity, and fast. What will our children rely on to support them in their golden years?

Insurmountable Debt

I’m sure you’ve heard of the power of compounding interest. It is truly a force to be reckoned with, but what’s scary is the dark side of that coin – the oppression of compounding debt.

The US national debt has risen over $11 trillion dollars in just 12 years, and it shows no sign of slowing.

Our children will be the ones to face the global financial turmoil as nations attempt to manage the weight of compounding debt and the compounding interest on that debt.

Hyperinflation, The New Depression

There are two causes of financial depressions, and they both happened in the 20th century. Once in America, and once in Germany.

America’s depression was caused by not printing enough money, and Germany’s was a result of printing too much.

Today, America prints as much money as it wants at seemingly no cost. However, the price we’ll pay for it may very well be greater than any number.

Hyperinflation is a period of rapid inflation that leaves a country’s currency practically worthless. The only ones who survive in these cases are those who produce and control commodities that are essential to the livelihood of the population – such as housing and fuel.

The earners and savers are the ones who get burned when hyperinflation hits. If the U.S. continues to print money like it is, our kids may very well see a state of hyperinflation. They’ll need to be better equipped to deal with that scenario than with the previous generation’s advice of get a job and save cash. They’re going to need a financial education.

A Tax Hike

Every time the central bank prints more money, two things happen:

  1. Taxes rise
  2. Inflation increases

As the three things I’ve mentioned above come to pass, the government will have no choice but to raise taxes (by a lot).

In order to stabilize the financial health of future generations, parents need to teach their children, early on, who pays the most in taxes and why.

If you’re not familiar with Robert Kiyosaki’s CASHFLOW Quadrant, now is the time to make the introduction.

financial educationThe letters in the four quadrants stand for:

E: employee

S: small business or self-employed

B: big business (500+ employees)

I: investor

Everyone resides in at least one of those four quadrants. The dilemma lies in that those on the left side of the quadrant pay the most in taxes.

Here’s the general income tax breakdown:

E: 40%

S: 60%

B: 20%

I: 0%

Do you see WHY it’s imperative that our children have a robust financial education so that they learn how to function on the right side of the quadrant?

Anyone has the ability to exist in the B or I section of the quadrant, but they’ll need the right financial education to do it.

They’re not going to get it in school.

So what are you doing to prepare your children for their future? May I recommend a free course in real estate investing a place to start?

Comments

  1. Daren Monk says:

    Matt, Great post, thank you!

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