Oscarlyn Elder:
As parents, we want what's best for our children and we also want our children to be the best they can be. Affluent and wealthy families have the means to provide a high standard of living, but those comforts can trigger entitlement and dependence. What builds up the next generation with adults who are hardworking, purpose-driven, and financially independent? I'm Oscarlyn Elder, co-chief investment officer for Truist Wealth. And this is I've Been Meaning To Do That, a podcast from Truist Wealth, a purpose-driven financial services company. We appreciate you listening.
We're going to be talking today with my friend and colleague Drew Egan, who is the managing director of family education at the Truist Center for Family Legacy. Drew's focus is on preparing the next generation for meaningful and successful lives. He's worked with many families who have tackled the question of how to foster that independent spirit in young people. Drew's whole career is focused on financial literacy for future family leaders, so I'm excited to learn from his experience. If you want to take notes on today's episode, we have a worksheet that you can download and print. You can find it by selecting this episode at truist.com/dothat. And in the show notes we'll also point you to a budget spreadsheet that we'll talk about during today's show.
I am a parent and I, along with my husband, have spent lots of time making decisions about raising our child, and then second guessing whether or not those decisions were the best decisions for her. I really want to make sure that our daughter is safe and that she's happy and fulfilled ultimately, and I also want her to be her own woman, someone who is ready to go out there and able to take on the world. Drew, I know that you can relate to this because you've got quite the household yourself. Welcome to I've Been Meaning To Do That.
Drew Egan:
Thanks Oscarlyn. I'm so glad to be here. And you're right, my wife Jenny and I have six sons, so we have a very high energy household.
Oscarlyn Elder:
We know that money can solve some problems, but it can also create maybe some unanticipated challenges as well.
Drew Egan:
Absolutely. When a family has significant means, it can be very easy to want to give the child everything, all kinds of opportunities. If you want a bike, here it is. If you wanted some designer clothes, there they are. Let's go on a trip. Sure, this all sounds great, but actually we need to take a step back and let the children have some choice. Think about what's important to them, connect with their values, and also develop skills, and that's going to come through practice and having some space to breathe and even learn and fail as we grow.
Oscarlyn Elder:
Drew, you've had so much experience in this space of working with families to foster independence, to foster financially independent young adults. You've probably seen this play out in different ways in different families. Are there situations that come to mind that are like best case scenarios where you've seen just children really grow into their own?
Drew Egan:
I love focusing on the positive and for every negative situation, I actually have more success stories. One of my favorites is of a 23-year-old who after graduating college, getting his first job, had a healthy conversation with his parents to say, "I really appreciate that I've had this family credit card where I've been able to buy the things that I want and it just gets paid off, but I want to feel like I'm making it on my own. I actually want to no longer use that family credit card." And the initial response from the parents, I'll admit was that because the providing things and even buying things for their children was a way of expressing love. They were a bit hurt and saying, "Oh, I love you though. I want to do this. You're important to me."
But they're able to have this healthy conversation and understand that I still receive your love and I really appreciate everything that you've done for me, but I want to be like you. I want to grow and be more successful, so I want to have some more independence. And it was great to see that. That success didn't happen just from a short one-time conversation, but really it came from parents who at a young age involved this child in the family business, gave them opportunities to make decisions, to fail, and even today he's leading a new initiative within the family business and they're giving him that opportunity to do that at a very young age.
Oscarlyn Elder:
Coming up next, we're going to talk about some specific principles and strategies that we can bring to our families to help foster self-reliance as a value.
Drew, we both have seen in our work that families come in all shapes and sizes in terms of their values and beliefs, their communication styles and so many other dimensions. And different families are definitely going to raise their children in different ways and frankly we celebrate that, that's kind of the diversity of life. But the common goal for parents and kids alike is often that the next generation be successful independent adults. Are there any universal principles that you think about in relationship to how families can create successful independent adults?
Drew Egan:
I love that question, Oscarlyn. Communication and healthy expectations and boundaries are so important. You need to be able to have those boundaries as parents and as children, it really goes both ways to communicate your needs. As a child, to be able to say, "Mom, dad, I don't really want to do this. I don't want to do soccer. I don't want to do that. I'm interested in going to a different place." But also having parents be able to do the same. Talk about what they need, what they want for their children based on their values. Don't just say you need to do this or I want you to do that. But what are the values that drive the reason why you'd like your children to behave or grow in a certain way? And then establishing some clear expectations and boundaries is really helpful to say, this is what it means to be a part of our family, and here's what it's going to look like. As you grow, there's certain responsibilities you'll take on.
Oscarlyn Elder:
There's something that you said that struck a chord with me and I want to be really clear to folks. I feel like my husband and I have done some things really well as parents and some things not as well as parents. So I am not saying that I am the model that anybody should follow. We talk about pivotal moments on this podcast a lot, like these pivotal moments where you're at a turning point in your life and you make a decision and it changes the trajectory. And we definitely had that with my daughter, just so folks know, she's approved me talking about this and she talks very openly. She is a young adult with dyslexia, and we reached a point in her educational journey where we felt like she needed something different from an educational support perspective, and our experts lined up like 50% saying she did need something different, 50% saying she did not need something different. So they were kind of split down the middle.
And my husband and I, I think at that point, created a situation where she had really strong voice and agency in that decision. And so we created a little test and learn opportunity one summer for her to be in a different academic environment. And at the end of that, she came back to us and said... It was late one Friday night where she sat down with me and she said, "Mom, you need to move me. I need to be at this different school because I will learn better here. That's all I needed." "You're right, you do need to be in a different place." And we made the change.
And then three years later she came back to me and her dad and said, "I need a different environment if I'm going to grow into my best self. If I'm going to go to the colleges that I want to go to, I need something different." And we gave her the space to come to us with that request and we heard it and we trusted her and we made another move, and neither one of those choices were easy. But when I look back at it, giving her the voice and the opportunity to speak up for herself, to advocate, to communicate with us, and then our willingness to listen to her and to act on it in an appropriate way, I just look at that and think, well, that was a parenting decision that went well.
Drew Egan:
Well, what I love about that example is the open communication and how you're able to establish that at an early age. It makes me also think about the importance of being able to say no, both as a child and as a parent. That's one of the boundaries and communication is we need to be able to say no to our children when they ask for something they want, right? Just because they want it doesn't mean they should get it. Let's find a way for them to earn it or make a decision to get there or help it be a process.
Oscarlyn Elder:
It's hard to say no, Drew, though, isn't it? It's hard. How do you do it?
Drew Egan:
Being able to say no is important. I always try and have a reason behind it. So what is the value for why am I saying no? I think my parents did a good job at this with me. Growing up we didn't have an abundant income. They were very good at saying, no, we're not going to go out to eat tonight because we are saving up to go to Disneyland. We keep thinking about that thing that we were working towards.
Oscarlyn Elder:
Delayed gratification. So they articulated delayed gratification and opportunity cost.
Drew Egan:
Exactly. Teaching principles along with saying no. There's a reason why we're saying no.
Oscarlyn Elder:
So Drew, when do you recommend parents start thinking about how to foster independence in their children as a goal? When should we start contemplating this?
Drew Egan:
Really there's no time that's too early, even if we don't have children, to start communicating with our spouse, a significant other about how we plan to do this. And I fully recognize that we have parents listening today that have children of all ages. Maybe you're listening today and you have a 48-year-old child and you're like, man, I wish I'd done a few things differently. Well, let's do some things differently. Let's start right now and create a plan to help those children become independent.
It makes me think of an example of this is a young adult, kind of late 20s who's still living at home, quite dependent on their parents’ support. And if left unchecked, they could eventually be a 50-year-old still at home, fully dependent on family support. So it needs to be a clearly established plan of first we're going to have you start cooking some of the meals three times a week. You're going to go get the groceries or take out the trash, whatever that might be, to start establishing that responsibility and ownership of their decisions.
Oscarlyn Elder:
So what I'm hearing is intentionality. So when I hear the word plan, I think intentionality. So intentionally think about what are the tactical actions that you can take as a parent to begin to move towards that goal of independence. And then I think the other element again that I heard was maybe communication.
Drew Egan:
I'd say if we can help parents and children embrace challenges and be okay with that failure and even have that open communication in that process, say what we do right now might shift to what it'll look like in the future. We want to test out this budget. We want to have you try and pay some of your own expenses. As we go, we might find that it doesn't work in certain areas. We'll tweak it, don't worry. Let's give ourselves the grace to make some mistakes and find a good path that's going to help us be independent.
Oscarlyn Elder:
So Drew, it might be hard for parents to recognize or even acknowledge that there are signs of dependency that are already settling in for their teen or adult children. I will say for me, I mean my daughter has had a credit card from our family from a very young age, and for the longest time she didn't use it. And then all of a sudden during her mid teenage years, she started liking to shop and suddenly I started seeing some charges show up and I'm like, ooh, I don't know that this is good. I don't need her to develop a $100 makeup habit every month, which is easy for a teenage daughter to do. But that was kind of a sign to me, hey, there's some dependency settling in. What do I need to do here?
Drew Egan:
So when we recognize some of that dependency creeping in, it's important to be able to talk about it and address it and help make a plan for changing it, and that's going to take some open and honest communication and setting some limits and boundaries. Maybe like the example you shared earlier, there was a credit card that they had access to that they could just spend on and purchase things. Maybe you switch to a cash system for a little bit and say, "Here's your monthly allowance. Here it is in cash and here's some responsibilities you have. You can make decisions on what you want to spend this money on, but it's up to you to make sure that you have all of your wants and desires covered." And then the tricky part is be consistent. So as parents when they come and say, "Hey, I already spent the money and my friends want to go out to the movies." What a great teachable moment to say, "Oh, well if you don't have the money, it looks like you may not be able to go."
Oscarlyn Elder:
Yeah, Drew, that's a great point because we can have all the plans in the world and the best tactics, but if we're not consistent and follow through, then it's hard to create frankly, the uncomfortableness and the growth that we're looking for. And again, I'll just share personally, I feel like that's the hardest part for me is often I'll have this idea about what I want to do and how we need to approach something and then having the stamina and the consistency to follow through on what I've said we're going to do. That's often where I fall short. Do you have advice for folks on maybe how they can improve the ability to follow through?
Drew Egan:
I love that question because it's always a balance of kind of this grace and giving them space to make mistakes and we'll help cover you this time, but other times being able to have that firm boundary because that firm boundary actually provides some security. Remember, we love our children and we want what's best for them. And so it can be so hard to tell them no when we've set up this boundary and said, "Okay, once the money's gone, it's gone." And they come and say, "I really, really want to do this thing with my friends." It is uncomfortable for the child to hear it. It's probably more uncomfortable for us to say it, but they learn pretty quickly and we need to let them have that learning and growth opportunity by being consistent.
Oscarlyn Elder:
When is it appropriate to start talking about the family's wealth and inheritance with children? I know that's a question we get a lot from clients who are trying to figure out the best way to go about this for their family. Do you have thoughts on that?
Drew Egan:
Definitely. It's on my mind a lot. I think all families in this circumstance are thinking about this balance between how much do I tell them and how much do I not tell them and how much do I give them financially and what do I not give them financially? And the truth is there's just not one right answer. So, what I would recommend is that parents start building the scaffolding of the language. What is money? How does it work? Where does it come from? Money comes from work. What do we do with it? Well, we save it. I like talking about my four buckets. What do we do with money? We save, spend, invest, and give. That's a very simple way of thinking about it for younger children. Having these conversations early and often about what is money? Why am I paying this bill? What is it for? I think my children at this point probably are like, "Oh, dad's talking about money again." Because I love talking about personal finances, but every moment is a teachable moment.
Oscarlyn Elder:
I think what I'm also hearing is we don't say, hey, you should share with your children by age 15 what your net worth is, or we're not drawing a line in the sand like that because it's really important that parents communicate within the context of the family values and purpose that they've established, but it is important to communicate it. And I know one of the things that I've heard is I've worked with families over the years. I remember a very powerful interaction with an adult child. This was someone who was approaching midlife, who was just beginning to understand the scope of the family's wealth, if you will, just beginning to understand, and there was this moment of epiphany where this adult child within this family indicated that they would have had they understood the wealth and the dynamics, they would've picked a different occupation.
Their heart and passion had really been in another direction, but that they had pursued a career in a different direction and had they understood, again, the full story of the wealth, they think they would've done things differently. It just struck me in that moment hearing that. Again, everybody in this situation is doing the best that they can with the information that they can. There's no mal intent from anyone, but the importance of communication and sharing of information at appropriate times can really impact the choices that people make.
Drew Egan:
Exactly. Suddenly finding out that your family has wealth, that shouldn't come as a surprise. Children are pretty smart. They can figure out the things might look and feel different. So how do you have those age-appropriate conversations as you go of trusts are important. Have you ever heard of a trust? You know why they exist? You don't have to tell them all the details and all the numbers, but to be able to help them understand why a family might put money in a trust, why they might invest money in real estate. These are all concepts that can be taught at a simple level and so that when it's time to have those more adult conversations about this is the money you'll inherit or here's our plan for your schooling, it's really not a surprise to them.
Oscarlyn Elder:
Drew, thank you so much for that perspective. This is why I wanted you on the podcast. I think folks as they listen are really going to take away some nuggets that they can frankly use as a lens as they're figuring out how they're going to communicate with their children and hopefully the consistency of that communication. After the short break, we're going to talk about some tools and resources that our listeners can access to help start some of those helpful conversations.
Drew, part of your job is designing educational programs and tools for client's families. You showed me a budgeting tool that you designed for families that you work with, that I think is really helpful and kind of unique. Listeners can download your budget tool from this episode's webpage at truist.com/dothat. Tell me why you focused on budgeting for the families that you work with.
Drew Egan:
Oscarlyn, anyone who knows me knows that I love budgeting and for some strange reason, I always have found it so fascinating, the problem-solving element of putting together a budget and aligning finances with a plan. I know that for some people the word budget seems restrictive and why should I have to do that? I have adequate money or resources to do this. I don't need a budget. But a budget should be liberating. It's really just a plan for your finances saying where's it going to go? And I think of the things we've been talking about today, a budget covers so many of the things we've talked about that we can help our children with. It has ownership, like let them decide where the money's going to go. What are those line item amounts? It has accountability.
We can say that I'm going to spend only $200 this month on fill in the blank, food, groceries, whatever it is, but what I actually spend money on is the reality, and we have to account for that and say, oh, the money ran out over here. What do I need to pull from to be able to still go hang out with my friends this weekend? It's giving that autonomy of choice and making those decisions as we spend money. There's tons of opportunities for mistakes. No one really ever spends exactly the $200 on groceries, so they have to be flexible. So it's really an excellent way to teach so many of the things about independence.
Oscarlyn Elder:
I think it's a great tool, especially for teenagers, as they're beginning to figure this out, to be able to have a hands-on tool to be able to help them in this process.
Drew Egan:
I think that it's great to let children practice this at many ages, whether that's as a 10-year-old and you're going on that family vacation, you say, "You get to choose and plan what that activity's going to be on the Thursday night when we're there, where we're going to eat, what activity we do. This is the amount of money that we can have. Let's have you go research and choose what we're going to do." I think kind of late teens, it's great to have them start having, whether it's through an allowance or with a credit card or however that is, some bills that they get to pay that are required like car insurance and they actually make that payment and then some fun money and things they get to spend as discretionary expenses because that's perfect practice for when they're a college student and have some regular bills, and especially as they become an adult and have mortgages, investment, allocations and things like that.
Oscarlyn Elder:
What role does financial literacy play in preparing for independence?
Drew Egan:
Well, when you really think about it, money is connected to so many aspects of our lives. We're buying things all the time, making major decisions and small decisions often each on a daily basis of things we might buy. And we need to allow our children to be able to make those types of decisions. Giving them the opportunity to do that at a young age and as a young adult and as adults is really important.
Oscarlyn Elder:
And I'd say critically important is education around investing.
Drew Egan:
Absolutely. Investing really is something that's really important for children to learn about because it's not just thinking about now but the future. And there's honestly several great tools out there for practicing investing. Hands-on tools like that are great for teaching children some investing principles.
Oscarlyn Elder:
And these are tools that anyone can access, but this is an area where expert advice can also be extremely helpful. And we're going to talk about that in just a moment.
Drew, what are some of the situations where advice from someone outside the family might be helpful when it comes to encouraging independence in the next generation, and what might some of those resources be?
Drew Egan:
Great question. Most of us didn't wake up one day and say, I want to be a financial analyst or an investment advisor. Even if you're good at finances, do you understand trusts and estate planning? For families that have means, it's important to have these trusted advisors that can help them make decisions in their journey. And one of the things that my team gets to do specifically is helping prepare that rising generation in both the financial and non-financial elements of living a life of success and meaning.
And so we have core topic areas on the financial side, things like personal money management, basic budgeting, buying a home, loans, credit scores, that sort of thing. You have wealth preservation where you understand more about taxes, estate taxes, income taxes, prenuptial agreements, insurance and other financial things like investing, like we've talked about, how to create a portfolio, what is dollar cost averaging and diversification. Those are all really important financial literacy that I think all adults really need, but especially in our families that have additional resources. How do we prepare that generation to be leaders in the family business, leaders in the family enterprise? Maybe running the family foundation or charitable giving. So we provide a lot of education also on personal professional development and philanthropy and community impact as well as money and relationships, how to think about money and how it impacts relationships and our reputation.
Oscarlyn Elder:
What's the process for engaging with clients on these types of topics? Do you find that the parents care more about this than the kids do? Or if so, how do you bridge that gap?
Drew Egan:
Yeah, I'd say every age and situation is different. It's common for, I think any of us that have had teenagers who they may be saying, "Ah, that's not for me. I already know the answer. What's this about?" But when you can connect it again to their values and why you're doing it and what this will look like for their future. That the key is to connect with things that they're interested in, and as you go, find the gaps and spaces where you can improve. And honestly, I feel like for many of our young adults and even older adults, there's this desire of increasing in their learning because they recognize some gaps in their own knowledge as they try and have conversations with an investment advisor about their portfolio or understanding the trust and estate planning. It's really helpful to have this type of education.
Oscarlyn Elder:
Drew, we've covered a lot of ground here, and I think it's been so incredibly valuable. We parents spend a lot of our time thinking about our kids' futures, and it's great to know that there are experts like you and the experts at our Center for Family Legacy thinking about it too and helping support the journey. We'll come back and wrap this all up next.
Drew, I'm so glad to have had the opportunity to have had this conversation with you about independence and self-reliance and kids and our adult children. Every person and every family is different. We've said that before, but you've given us advice and tools that I think can really apply across the board. So thank you for coming in and talking with me today.
Drew Egan:
Thank you, Oscarlyn. It's truly been a pleasure.
Oscarlyn Elder:
Before we go, as you know, and I've been meaning to do that, we have a tradition, naming the one thing that you've been meaning to do, but that you haven't done and that you're willing to commit to with all of our listeners to doing in the future. So Drew, what is that for you?
Drew Egan:
For me, I've been meaning for a long time to create an individual video for each of my six boys and for my wife, looking directly at the camera, telling them the things that I love about them, the skills that I see in them, their talents and traits. I see this as a way that if I were to suddenly die tomorrow, they could turn to that and have a conversation with their dad or husband and feel my love and care for them. And my goal really is to actually do this maybe every 5 or 10 years, and it could be a meaningful thing whenever it is that they go and watch these, if ever. But to me, I know it would be meaningful for me.
Oscarlyn Elder:
Drew, that is really beautiful. That's a very powerful, I've been meaning to do that. I lost my mom when Maddie was born, so my mom passed away like four months after Maddie was born, and it fundamentally affected how I thought about parenthood. And so every year I've written Maddie a letter and put it in her chest, her trunk, just kind of capturing the growth that I've seen and how our relationship has evolved. It sounds like kind of a similar exercise to what you're looking to do with your boys. Anyway, I think it's been as cathartic for me as anything else, but that desire to want to leave her with something tangible, should something happen to me, that she would always have something to go back to understand what she meant to me. So I encourage you on your journey to record those videos and I look forward to hearing how that goes.
Drew Egan:
I will. Thank you.
Oscarlyn Elder:
Drew, thank you again. And for you listening, thank you for joining me today. If you'd liked this episode, please be sure to subscribe, rate and review the podcast and tell friends and family about it. If you have a question for me or a suggestion for this podcast, email me at dothat@truist.com. I'll be back soon for another episode of I've Been Meaning To Do That, the podcast that gets you moving toward fulfilling your purpose and achieving your financial goals. Talk to you soon.
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