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For the younger generation that may not recognize the famous line that inspired this post (which truly is a shame) it is from the classic film Casablanca where Humphrey Bogart uttered the immortal line, “Here’s looking at you kid.”:
With that out of the way, I thought I might shed some light on the phenomenon of Imprinting.
There are many instances in nature where imprinting is vital for the survival of the young.
Newborn chicks, for example, will immediately gravitate to and become bonded with the first thing it sees, typically the mother.
There are countless examples of when the newborn imprints on something that mother nature never intended it to, such as the case when a duckling has imprinted on a human and follows him wherever he goes.
But for the most part, imprinting is a protective mechanism that is implemented in order for the next generation to have a suitable role model to learn from.
Children are sponges.
I guess there are many ways to interpret that statement.
I am sure some parents feel like their children sponge off them, asking for financial handouts here and there.
However what I am referring to is how quickly children process and absorb information, both good and bad, during their early, formative years.
A developing brain is truly like a sponge.
As a prominent figure in a child’s life, the main source of information for that sponge is the parent.
Unfortunately there is no on/off switch for this sponge and sometimes unintended material is passed along to the toddler.
I remember once while driving I accidentally blurted out a curse word in front of my daughter, who must have been a little over 2 years old at the time, and I soon heard it repeated back to me in the cutest/most adorable voice.
Her mother and I looked at each other immediately (I tried not to laugh).
I knew at that point I had to be careful to censor what was said in the immediate vicinity of my daughter.
As as parent it is great to take advantage of these formative years to instill all sorts of good habits to your progeny.
Becoming a financial role model for your child.
Growing up I really had no idea about finance.
I knew my father was a successful internal medicine doctor and that we had nice things (waterfront house in Louisiana, a brand new Mercedes 380SE, for example).
Whenever I wanted something I typically would get it.
Whenever I made great grades or did something of merit (valedictorian of my middle school graduation, and all sorts of science and spelling bee trophies) I would get bonus gifts (my favorite was a 14 ft bateau with a 9.8 hp Mercury outboard motor).
Life was good but I never learned the value of money or the amount of work needed to save and buy some of these items on my own.
Even when my dad passed away when I was 14 years old not much changed in terms of getting what I wanted.
It is no wonder that I was a lamb that got attacked by financial wolves when I first made my way into the real world and started adulting.
It was easy to fall into debt via student loans, car loans, etc because I did not know about the ramifications of being in debt until much later on.
I am trying to give my daughter a head start in her financial education by sharing some of the financial knowledge I learned the hard way via the school of hard knocks.
Granted it is hard not to spoil her like I was growing up and she has been the recipient of a lot of nice things from me, especially if it is the result of her academic achievements.
But I do try to instill onto her sound financial practice, especially when it comes to saving money and investing.
That was one of the primary reasons I started the “Bank of Daddy” savings plan which she takes full advantage of.
She also is aware of the passive income empire I have slowly built throughout the years and I share with her the amount of money those enterprises have generated for me each month.
I one day hope that she too takes advantage of savvy investing to have passive income that could supplement, and one day replace, her active income.
With a potential one to two decade head start over me, she should be more than capable of building something far more incredible than I could ever hope to achieve.
It seems my efforts are starting to pay off because I truly have created a “financial mini-me.”
Of course there is a fine line to straddle when sharing financials with your children, especially if you are very well off.
There is a risk that the child will then feel entitled and with no need to have to strike it out on his or her own.
I have mentioned to my daughter that I fully expect her to build a life of her own and at some point the parent financial tap will be turned off (which I anticipate will be after college graduation) when I start concentrating on enjoying my life in my golden years.
I truly hope that she can see what hard work and financial discipline can achieve with me as her role model.
My daughter is close to finishing up her junior year of high school and she still has the desire to become a physician.
I truly hope that the medical profession can still provide her the success that I have achieved.
The outliers can be even more remarkable.
It can be very hard to escape the bonds of family, especially when it comes to financial circumstances.
It is common for children of high net worth families to follow in the footsteps and become high net worth individuals themselves.
Children of financial disadvantaged households, sadly, are far more likely to find themselves in similar situations as an adult.
It is indeed very hard to break out from this generational financial cycle.
However there are some incredible individuals that do just that.
I have witnessed a few such children demonstrate incredible grit and indeed have set themselves on a far better financial path than what they grew up in.
I truly feel that these individuals who have overcome the odds are destined to achieve even greater results than those who grew up in the lap of luxury.
One such individual comes to mind and I would love to share her journey.
I first met her when I was dating her mother, I believe she was around 16 years old.
She was living with her father who apparently did not have the best of financial habits.
I found out that even as a teenager she was running the household finances, paying bills on time, etc.
She was incredibly inquisitive about finance and in time turned to me as a resource.
When she first started working in the fast food industry she started asking me about retirement accounts and what advice I could give her.
I was absolutely floored.
Here is a 16 year old girl and she was already thinking about and wanting to prepare for retirement.
I did not even think about retirement stuff until I was in my late 20’s/early 30’s.
I cannot even imagine where I would financially be now if I was as precocious as her in my financial development.
I explained the difference between traditional and ROTH IRAs.
I tried to impart as much knowledge as I could upon her, emphasizing that at her income level a ROTH IRA would be my retirement vehicle of choice.
I also told her at her age she could be more aggressive in her asset allocation by going exclusively into equities.
My financial protege did just that, impressively squirreling away $2k and opening a ROTH IRA on her own by the time she turned 18.
I also warned her to not be concerned with the short-term fluctuations in her retirement account value as this was a (very) long game she was playing.
As the years have passed this girl turned into an incredibly bright young woman.
She entered university on scholarship, was admitted into the honors college for business, and finally graduated with numerous honors and accolades.
She is about to start her masters program and her plans are to become a CPA (and based on her previous internship experiences she is highly coveted by numerous big name firms in the area).
I have absolutely no doubt in my mind that she will be successful financially.
I only hope my own daughter follows a similar trajectory of success.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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