Money is an insanely sensitive topic, especially when it comes to family. Even now, I don’t let my mom in on my finances. There are things I can justify on my Visa bill that she’d lose her mind over, like the $15 PS4 game I’ll spend 60 hours on. To me, I’m spending $0.25 for each hour of entertainment but to her, I’m throwing money into a pit. I guess we’re both right, depending on what values you grew up with. That’s why most families don’t talk about money. It’s polarizing.
To be fair, my mom raised me to be frugal, but since I was a rebellious teenager, I grew up to be the opposite, eventually plunking my sorry ass into deep debt not once, but twice. These days though, I worry –I– may need to step up to the plate and offer some guidance with the family finances. It hasn’t been a pleasant conversation.
My brother has money. When our dad passed away, life insurance kicked in and made sure he was okay. Mom took control of his finances because he’d never read a personal finance book in his life, and he assumed she knew what she was doing. He was wrong. She locked down a chunk of his money into 1.x% bonds. That doesn’t even keep up with Canadian inflation and is about as dumb as stashing cash in a mattress. Since then, I’ve explained index funds to my brother and why investing in equity is preferable at his age due to the compound gains. This conversation would be impossible with my mother, but I’m trying. She doesn’t take ANY financial risks at all, and suffers for it. Due to stubbornness alone, she’ll most likely stay poor. She also doesn’t believe he needs a credit card, even though he’s 23. Don’t get me started. It’s been infuriating.
Now, this is a HUGE problem for our family. One day, we’ll need to take care of Mom, and our only asset will be the family home, which will hit the market around $550,000 if we ever get around to renovating it. If, in her old age, shit gets squirrelly, that money won’t last long. We may need to sell the house. Potential solutions involve investing NOW with what money we have. Without divulging too many numbers, if my brother invests properly now, he’s looking at $500,000+ by the time he’s 65. Even without the house, he’ll be okay. I will be too, thanks to my 99-year leasehold, BUT HE NEEDS TO INVEST PROPERLY. None of this 1.x% bond crap our mother recommends. We’re also trying to convince her to take in a student because at the moment, she lives in a 4-bedroom townhome alone, which is just about the most wasteful thing I’m currently aware of. Let’s say she has a renter for just one room in the house at $600/month. That’s $7,200/year, and if she invests it all properly, she’ll have $100,000 more in the bank by the time she’s 65. WHY ISN’T SHE DOING THIS? Well, her values don’t allow it. Unless I can change her mind, her belief that family homes are for family only WILL KEEP HER POOR FOREVER. This is terrible because if she’s poor, my brother and I will have to pick up the slack. We’ll have to work harder and longer to take care of the family. Don’t get me wrong; taking care of my mom is a burden I’m happy to bear. I JUST WANT TO TAKE CARE OF HER NOW THROUGH FINANCIAL EDUCATION INSTEAD OF WAITING FOR THE DEBT SHITSTORM TO HIT US WHEN SHE’S 80.
It’s one thing to be financially secure on your own. It’s equally important to make sure your loved ones are financially secure. If your finances are directly affected by someone, GET THEM ON BOARD WITH PERSONAL FINANCE. This blog is a good start. Make sure they understand saving, investment, credit, interest, and retirement. Trust me on this. And if you don’t? Well, you’re gonna be stuck paying for it. Let’s hope that doesn’t happen.