BALADODIFFUSIONS

PARTICIPANTS

Mark Brisley
Managing Director and Head of Dynamic Funds

Martha Adams
Certified Financial Planner

PRESENTATION

Mark Brisley: You are tuning in to On the Money with Dynamic Funds, a podcast series that delivers access to some of the industry's most experienced active managers and thought leaders. We're sitting down to ask them the pertinent questions to find out their insights on the market environment and navigating the investment landscape.

Welcome to another edition of On the Money. I'm your host Mark Brisley. During the height of the pandemic, Financial Planning Canada conducted a survey they have called The Discomfort Index. Study that found that one in four Canadians are uncomfortable talking about their finances. Interestingly, the subject ranked almost equally with politics, religion, and relationships. To some degree, this type of data was the catalyst for our topic today.

As adults, it's not an easy conversation. By the time many of us start to understand the importance of open and educated dialogue around money and finances, our attitudes and feelings about money have long been shaped from our experiences all the way back to childhood. That's why today's conversation is for the parents.

In a world where gratification is seemingly just a tap away, financial assets can be stored in a cloud, and credit drives a consumer-centric world, the financial landscape becomes increasingly complex. By extension, our kids are going to require a wide range of skills and knowledge to be able to successfully make informed choices about money that will serve them well as adults.

Conventional wisdom would have us believe that school is the vehicle that is strengthening students' financial literacy skills, including practical lessons about money, but that is simply not the case. Dramatic technological transformations in the economy, including the nature of work, will affect savings and retirement for our kids when they become adults.

Parents, adding to the list of an already complex role of raising our kids, it's never been more important to provide them with a strong understanding of their personal finances in order to help them make smart decisions about money and set them up for success. Most importantly, be a positive influence in shaping their views, attitudes, and feelings that they will carry for a lifetime.

My guest today, certified financial planner, financial advocate, and best-selling author of Cleopatra's Riches, and frequent guest on Money Line and Breakfast Television is Martha Adams, who returns to the show to discuss the importance of how we can talk with our kids about money and involve them in the financial conversation beyond the budgets. Martha, it's great to have you with us.

Martha Adams: It's so wonderful to be back, Mark! Thank you again for having me.

Mark: Let's jump right in. We all agree that talking with our kids about money is an important conversation and one that they don't always look forward to, but when do we start that conversation? When are they too young, or when have we waited too long?

Martha: It's such a great question. It's one that we're often thinking about, and the best time really is now. The idea that there's no time like the present really does apply here. I mean, their age and their life circumstances are going to build context for the style of conversation and the level of detail you're going to share with them.

I can remember speaking with my son about money when he was three years old. Now, I wasn't asking him to compare mutual funds or look to the financials of any particular company and analyze them. What I was doing, though, was normalizing the conversation. It started with something as simple as the fact that we had run out of milk.

I wanted him to understand that the milk didn't just reappear in the fridge, that it meant mommy and daddy were going to work. What do we do when we go to work? Well, the simple idea that we help people, and this started the conversation on how we earn money. These kinds of ideas are how we build and grow our conversation with our kids, the most important thing is opening that line of dialogue and normalizing the conversation around money.

Mark: Martha, I think for all of us, as parents, there's a lot of pressure to raise the ideal child. With technology, like I mentioned in the opening, we have access to tons of strategies for teaching our kids about how to have money, how to be responsible with money, but you've had different perspectives on the money conversations that we have in our lives. I'm curious, what's the starting place of money conversations with our kids?

Martha: The starting place, really, is to start with yourself. We all have a money story because money is a human experience. If you think about any event in your life of any level of significance, chances are money was there playing a role in some way, shape, or form. Along with that, in your story, came messages, ideas, and feelings, those emotions that you've internalized.

For most of us, the overall messaging throughout our lives has either been negative or we've been discouraged to have the conversation altogether. That has added to that pressure because now we might not be used to having the conversation, we've got to have a conversation that we're not quite sure how to start. Starting with yourself makes it the most approachable conversation there is.

Working through your own money story and addressing the messages you received is an essential first step in breaking a cycle of negative money talk with your kids. Some that you might not even realize are there.

Mark: This definitely has a different sound to it, because I think, even myself, I want to jump right into that budget conversation, how to balance a checkbook, although that makes me old because if I said that to my kids, they look at me like I had two heads, what's a checkbook? What are some of your perspectives then on the reason a lot of us hesitate to start the budget conversation or don't feel comfortable talking about it? I found that survey interesting because when they said relationships, politics and religion, and money were equal and things we don't like talking about, money seems to be up there.

Martha: You're right, Mark. It is right up there when it comes to our discomfort and that survey, those results are there for a reason. I mean, with so many of us, we can feel that we're starting behind the eight ball, right off the hop. The reasons for that, we either didn't have the conversation when we were growing up or there was this underlying discomfort with the conversation in the first place.

Here we are as parents already being really hard on ourselves, we want to raise the best kids possible. We want to give them the most solid foundation that we have. We ultimately become more critical of ourselves, to begin with as parents. Especially, when it comes to money in our own lives, we might feel like we are not qualified to have the conversation in the first place.

That can often prevent us from starting meaningful conversations because, on top of the pressure and judgment we feel as parents, many of us also aren't used to money being a two-sided conversation. Now, I really want to highlight this point of a two-sided conversation, because if you think about someone teaching you about money when you were growing up, and you pull that up on the screen of your mind, did it actually feel like a conversation, or was it more like a one-sided monologue? Where someone was speaking at you, how did you feel? Did you feel a part of the conversation? Did you feel like you could learn, or did you feel like you were being judged in the conversation or in the monologue?

You see, the thing is that for far too many of us, the discussion never actually happened because it was faux pas or it was that feeling of someone wagging their finger at you, telling you what not to do. All of those negatives. Those experiences left us with emotional associations that we likely still carry with us today because we haven't had the opportunity to recognize them yet.

As you connect with your own money story, with those experiences, you'll actually gain an awareness, and an understanding for your communication about money with your kids. You'll become aware of what you say and what you don't say, and the most importantly, Mark, why that is. It's in this process that you'll gain meaningful perspective for your experiences and context to share in your conversations with your kid. That two-sided dialogue.

This is where you are answering the why of it all in the most meaningful way through those stories that you can connect with together. I think about my upbringing and the most meaningful messages that I have were around the stories. I could connect with my parents in that, I could ask questions, we could have that back and forth. In so many ways, because money's a human experience, it's no different because as you tell the stories, now you can choose the messages that you cherish and want to pass down to your children, and the ones that you want to see positive change in.

In this idea alone, you're taking your power back. This is where we're utilizing an idea that we discussed actually in a previous conversation, Mark, the how versus the why that you referenced earlier. When we start with the why, we give the how impactful, positive, emotional association. Instead of starting with the how of budgets and cash flow, and seeing their eyes glaze over, or that one-sided monologue, we're giving the idea of why, meaning value and purpose. Underlying all of that is connection.

Mark: It is making me think of some of the things, just things we say how important they are, but also listening to kids. I think about some of the things that I've heard my kids say over the past, and they really do say some crazy things sometimes, but it probably isn't that crazy if they haven't had the influence from the parents.

I remember my own kids seeing nice houses or nice cars and they immediately assumed a successful financial circumstance of the people that have them or the driveway they were sitting in. How do you handle that, where it is such a consumer-centric society, we see what we see, and we feel that that represents something that may not be reality? How do we have the conversation like this?

Martha: It's such a great point because it's something that so many of us have experienced. This is actually a perfect example of how we can internalize feelings and beliefs around money. If we don't have that open line of communication, then we don't have that opportunity to address it. When having that open line of communication and normalizing the conversation around money, we are opening that pathway for our kids to ask us.

In a lot of ways, and I see it in my son all the time, he's curious. He wants to learn; he wants to ask. In fact, I hear those why questions a lot from him, and it causes me to look to explain things differently in a way that he can connect with. This is one of the benefits of normalizing the money conversation and nurturing that open line of communication. You can talk about meaningful points as this, because, with this example alone, they're forming their own views on what success means.

Does it mean consumerism? Does it mean you have to buy certain things or display things in a certain way? Mark, you and I both know that those cars or those homes don't necessarily equate to the financial circumstance that our kids might be internalizing. Here we see the emotional associations such as these that can build and lead to comparison, and ultimately a make spend cycle of money in their lives.

Talking with them, giving context and relevance to all of the circumstances that could have led to purchases like that can ultimately build more positive associations and really a healthy relationship with money in their lives because, throughout this, you're actually helping them connect to what their own versions of success are.

Mark: There also seems to be more outside influences than we had when we were kids. I guess one of the ones that I wanted to talk about was the influence of technology because that's going to make the conversation for us with kids that much harder. You and I may have been given $20 when we were kids, and that was in our pocket, it was tangible, we could touch it. We saw it get spent and we knew what we had left.

Now we have debit cards, we're a tap and go society. There's no feeling or connection to it seemingly anymore. Then the extension of credit, allowing people to buy the nicer looking car, everything is based on monthly payments. How, as parents, are we dealing with the challenge of technology and how it's influencing the conversation?

Martha: I completely relate to the idea of having that cash in my wallet and knowing what I had, what I had left, and how I could then manage it. Yet, today, exactly like what you're saying, Mark, we see our kids with this debit card that they just tap, and there's no connection to it. We immediately start to look to what's different, and in a lot of ways, as parents, it can feel harder, because we can't quite relate to it. Instead of looking at it as harder, what if we looked at it as simply different? That immediately helps us shift from the blocks of everything we can't do.

If I'm looking at it as, "Well, they don't have cash so I can't teach them the way I did or I can't connect with them" or all the can'ts. Instead, I can start to look to all the things I can do because I'm now connecting with their perspective and all the things that I do have because it's something that's simply different. Then with that, I can start to look to the technology as an asset versus a liability. I can utilize it as something that I can almost mimic the idea of having cash in my wallet.

Whether that's an app that you can utilize as a family and talk about and discuss and they can see and connect with, or there are also bank accounts that have features that help them track, help them connect, help them see where those expenditures are going so that they can look and stay connected to it, or have alerts that show the expenditures and what's happening.

There are all sorts of ideas with technology, rather, that can help you actually utilize it as an asset. It all started here with the way that we feel, looking at it as something that is simply different versus something that's a liability.

Mark: There's a lot of building blocks that are being established here for starting this conversation. In one of our previous podcasts that we did, Martha, together, you talked about the why versus how on financial empowerment. You've touched a little bit about that today. I can see how this is having to be applied as part of the conversation with our kids. Anything relevant, though, to your own upbringing or that you're experiencing in your life today to bring that point home even more?

Martha: There's so much in my story that I connect to it and you'll see not only in my life but in the lives of others today. There's actually one that I want to share with you that was in a friend's story that I experienced both growing up and as an adult. It's the idea of being paid for chores. I'd see that in my friends, I wasn't paid for chores growing up because, culturally, my parents didn't quite believe in that idea. They didn't have that experience. As a child, I'm not going to lie, I was not really happy about it. I felt like I should be earning money for doing chores.

Actually, I saw, as an adult, how that worked to a more positive for me than anything else because here's why. I'm talking with my friend, and he was paying his son to do chores around the house. We're talking about his connection with the idea of making money. It was this underlying emotional connection that was negative. It was making money has to do with dread. Why does it have to do with dread? Well, it's this thing that, this task that you have to do that you hate. You've got to go to whether it's a job you hate, work you hate, and you've got to make money.

As we continue to work through it, it was from the idea of doing chores growing up. That was the base idea that caused that emotional association. Now, that idea isn't exclusive to him, the idea that making money has all sorts of negative connotations versus earnings. I hear that time and again when I'm talking with people.

What he found was, what we worked through was that, with his son, instead, when he realized that he was paying his son for chores but when he realized that, why was he paying him for chores? Well, it was about contributing to the household. Instead of paying his son for the chores, he categorized that as contributing to the household that you're a part of. Now, how did we shift from the idea of making money to his son earning money? It came to, instead of making money being a task, earning money had meaning. It was connected to the gifts that his son has and one of them was in graphic design.

He said to his son, "Great, I need graphic design for my work." He would design different aspects, whether it was for social media or for presentations for his father and he earned money by doing that.

In earning money to do that he connected to earning money being a part of self-expression, versus being this task that he dreads. Even in that, we can see the difference in an emotional association that we can help our kids with right from a young age.

Mark: You also have talked about a tool that can help us work through or unpack these emotional associations, and especially with our kids that are going to be formed through their experiences as they go through childhood and teen years and young adults. You talked about something called the 4R Process, which was recognized, reconcile, release, and repeat. How would that apply here?

Martha: Absolutely. The 4R Process is what we use to work through this part of his money story, to then recreate the path forward for his son that he wanted to see. In recognizing his experience of chores for money, and the way he felt about it, he could then connect to what he was saying to his son and the way he felt about it.

Then comes reconcile. He can connect with his perspective and the way those feelings were formed. He was influenced by his parents in this idea. This is a perfect example of how past generations can influence our money story today and future generations to come without us even realizing it.

Then from there comes release. He could ask himself is this idea of money for chores, serving me and my family, or do I want to recreate something different? Do I want to build the foundation for another idea that can be passed down then through his son, and into future generations? With that, he could release the old idea with gratitude for what he learned. Gratitude for his parents being well-meaning in teaching him that idea, but also accepting that he wanted something different for himself.

With that, he could refocus on the message, and ultimately the experience he wanted his son to have. From there, he repeats. I spoke with him about then repeating that idea and keeping that open line of communication open with his son. What does earning money mean? Then his son could connect with that spark that he has in graphic design, in this case, and then build confidence by continuing to practice and think of other ideas and, ultimately, as he grows up, build that value proposition that he will make a difference in this world then.

Mark: That is a practical tool for understanding and developing, ultimately, what we're describing as financial EQ for our children. How can we bridge that then to help with the part that we all seem to want to jump to, which is the actual financial IQ conversation?

Martha: Bridging it is the most important thing because not only do we have these emotional experiences, but it's also something that's so central to so much of our lives, and the IQ is also essential. What we're proposing here is that the EQ, in so many ways, is the starting place. Because even in that last example that we showed, we could see that money is experienced far more emotionally than solely being understood intellectually.

When it comes to the IQ aspect, I'm a big proponent of experiential learning. So, earn and enjoy are two aspects of money that, in a lot of ways, our kids experience. They'll see us going to work. They'll see that form of self-expression, and in the last example, we could see how we could share that line of communication with them and enjoy. Of course, they see us in our expenditures, in our lives with what we're doing as a family, but the part that we have what I would say the greatest opportunity in when it comes to experiential learning and money with our kids is the grow category.

Children learn so much more from what we don't say. They learn so much from our actions, and so when we open that line of communication into the experience of how we grow our money, we are increasing their engagement in the financial conversation. What's an example of how we can do that? Take them with you to see your advisor, and when you're doing that share the why of it all, because in this process you are going to allow them the opportunity to ask you more questions, to ask you more of their whys or what's happening here?

What did this do for you?

Here are the practical IQ conversation started with the value that you put on the money that you've earned and the value of advice. We allow our kids to see the value of advice in so many other aspects of our lives, whether that's in a health advocate and we're acknowledging that we're a specialist in something, and we're going to go to our natural path or medical professional for their specialty to advocate for health, exposing them and opening that gateway to the value of advice when it comes to your financial advisor can mean so much to their IQ conversation.

Mark: I am so glad you have brought this up, the subject of the advisor because I have a couple of questions that are a little bit more around the recency of fact of what we're experiencing in the media, coming through two tough years with the pandemic. It's almost a cottage industry around the advertisements with the message of devaluing the path that your parents took in working with a qualified financial advisor to grow their wealth.

Right down to quotes from certain commercials you're not still dealing with mom and dad's guy, are you? This suggests that the next generation is going to have to make better choices. What's your take on approaching this, managing this media messaging, this advertising, this very direct affront to traditional advice and how do we have this conversation with our kids?

Martha: In a lot of ways, I believe that that messaging is filling a disconnect, but what if we could instead have a connection between us as parents and our kids in the money conversation in all aspects of the way we earn, grow, and enjoy, and the most important thing is the why of it all. One of the things you talked about there, Mark, is the path. The path our parents took. That's one of the things that when our kids aren't exposed to the grow category, the path isn't seen, all we see is the end result. We don't have a connection to the why, but if we instead connect to the why and show the path, show the most valuable piece which is the journey and what it's done, now we understand more the invaluable idea of having an advocate.

In a lot of ways, there's a lot of societal messaging that promotes an idea that we must be the Jack of all trades. We've got to be great at it all. Then that applies to managing our portfolio and financial ideas, and yet we all specialize in something. Not all of us are meant to be a medical doctor, or a naturopath, or a financial professional. We are meant to specialize in our lives, advocate for ourselves, for our voice, for our goals, and find the appropriate advisor for you who is going to advocate for your finances. That's where you can actually achieve your goals in a far more streamlined manner. One that ultimately ends up amplifying your voice versus muting it.

Mark: My final question is about what we're going through right now. You and I are having this conversation on Monday, May 2nd, 2022, markets continue to be extremely challenging. There's real pressures in the economy with inflation and rising rates. There's a war going on across the Atlantic. Our kids are not immune or unaware of how difficult things are right now, they're probably trying to make sense of it.

Can we use this, though, as an opportunity? Is this a good time to be talking to our kids about some of the things we've discussed today? You know what? I'm going to tell you a story of my own daughter who's 16, she's just started driving. That's one part of the story. The second part was we were watching the news together. Her just starting driving is her just complete befuddlement over the price of gasoline and us trying to help her understand about using the car for practical purposes and not just wheeling around, given the price of gas.

The second one was watching the news and her hearing the comments that the price of chicken is potentially going to go up as much as 70% because the cost of feed for the farmers to grow the chicken has risen so much and that translates to ultimately the final price at the grocery store. These are learning experiences our kids are hearing, and it seems to be missed opportunity that we don't bring these up around the dinner table or conversation, or when we have that alone time with them in the cars, is that an appropriate message in this current environment?

Martha: It absolutely is. Here's the reason. A lot of times when it comes to the money conversation with our kids, we can feel like we don't want to have it because we want to protect them. We don't want them to experience any negativity. One of the things we talked about earlier in our conversation is that our kids connect with more than what we say, they connect with what we don't say.

When it comes to the idea of gas prices, for example, maybe we don't talk about it, but then what? They're going to hear our huff as we go to the gas station to fill or whatever it may be. Maybe we're back, and we've looked at our credit card bill and we're huffing. They are seeing that and they're internalizing that. In talking about the idea of developing that solid foundation of emotional intelligence, it is in embracing those emotions that come from those life experiences and working through it.

We see it with the 4R Process of recognize, reconcile, release, and repeat. That all comes from starting a dialogue and continuing it to see the awareness and change that you want to see. There's so much in life that we can't control. There's so much that we can, and in talking about things, that's one of the things that we can control. We do have positive influence there in addressing things and working through them.

Now in this idea, emotions are not our reliability. They are our asset because they are the tool that allow us a unique aspect of self-awareness and understanding. That's ultimately what we're teaching our kids, whether it's at the gas prices, whether it is about doing chores at home or how we earn money, to any number of things when it comes to money in our lives.

Mark: It's made me think we don't always choose the timing of when we have to have these conversations, but we can certainly choose the content and the influence. Martha, this has just been such an unbelievably valuable conversation. I hope for all of our listeners, the importance of combining the EQ and IQ conversations together has been meaningful.

I know you and I both believe that the quest for wealth is not simple. There is value for advice and it goes beyond our generation and into future ones. With the conversation we've had here today, talking to our children about money's never been more important. I would invite any of our listeners. If they'd like to know more about this, they can actually visit our website at dynamic.ca/advice to hear more on the importance of dealing with a professional when it comes to matters like the ones we're talking about today. Martha, again, thank you so much for your time. We look forward to having you back again really soon and appreciate you being with us.

Martha: Thank you for having me.

Mark: Thank you to all of our listeners. I look forward to speaking with you in the next edition of On the Money.

You've been listening to another edition of On the Money with Dynamic Funds. For more information on Dynamic and our complete fund lineup, contact your financial advisor or visit our website at dynamic.ca.

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