How to prepare for the cutting of the financial umbilical cord

Last week’s article, Why cut the financial umbilical cord, elicited interesting reactions from readers:

1. Huh! That’s too soon. Kawawa naman.

2. I agree with the cutting of the financial umbilical cord. It’s time for them to experience the real world after their relatively sheltered life with yaya, driver, allowance. I allowed my daughters to experience commuting by public transportation to and from their Makati office. One even experienced going through Metro Manila flood. I felt for them, but I was proud to see them go through these experiences and come out stronger, humbler, and more appreciative of their blessings.

3. When did it become a fad not to cut the financial umbilical cord after graduation? Mine was cut right away.

4. Thank you for this article. Although my husband and I are still many years away from that, this is a good guideline for us, parents, who sometimes tend to be over-protective to a fault.

5. Is that an Ateneo training? My husband was the one who cut his own financial umbilical cord. He even declined his parents’ offer to pay for our wedding, and his share in the sale of an ancestral property saying, “Tapos na ang responsibilidad nyo sa akin dahil naka-graduate na ako.”

6. I agree with this and will forward your article to someone whose middle-aged children’s financial umbilical cords have not yet been cut!

7. Anton (my youngest son’s name), I hope my parents won’t read your mom’s article! No! 

Well, what was your reaction?

Lessons from the eagles

Eagles can teach us a lot about marriage and parenting. Particularly, the bald eagles are loyal to their mates. They practice “Till death do us part” because they only look for a new mate when their partner dies. Moreover, they build their nest together. They take turns in incubating their eggs, hunting for food, protecting and feeding their eaglets. Yup, Papa bald eagle is secure with his masculinity as he also takes his turn in “baby and egg sitting” while Momma bald eagle goes out to spread her wings, look for food, bathe and do her other rituals. They cooperate in rearing their eaglets until such time when they are strong enough and ready to fly. When their offsprings reach 12 weeks, they will do the ultimate act of parental love – i.e. the push. Watch this short video

Steps in preparing your kids for the cutting of the cord

Papa and Momma eagles are able to do this act of tough love because they prepared their eaglets well. Here are some things that we, humans, can do to prepare our children financially for the eventual and needed cutting of the cord:

1. Start their FQ journey as soon as they are born. Open a savings account for them and deposit all their cash gifts in their own account. This way, you don’t comingle your funds right at the start.

2. If you give them regular allowance, keep it on the low end. This teaches them to live within a limited amount. When job hunting comes, starting salaries will not pale in comparison to mom and dad’s allowance. On the other hand, getting used to receiving generous allowance from parents is one of the reasons why some graduates find it hard to accept low starting salaries. They would rather “rest muna.”

3. Teach them to save regularly. This habit, when formed early on, will be with them forever. When cash comes in, set aside a percentage – Pay yourself first, the first basic law of money. When they start receiving their own pay, they will continue to save and hopefully, be delighted because the amount is now bigger than their previous allowance from parents.

4. Bring baon. Both my husband and I brought baon to school and later on during the first years at work. So goes for all our sons. This not only saves cash but also controls the quality of food we eat on a regular basis.

5. Teach them how to invest early on. While they are still your dependents and you can provide for their needs, invest their money in higher yielding instruments like direct equities or, better yet, equity funds and hold for the long term. Of course, in doing so, remember the second basic law of money, “Get into something that you understand and seek advice only from competent people.” Develop their entrepreneurial spirit so that early on they know that earning money can be both challenging and enjoyable.

6. Be frugal. Be careful not to prematurely get them used to luxuries. Even if you can afford to shower them with expensive stuff, think of how they will be when they start earning their own keep. They will feel a big downgrade in their lifestyle when you cut the cord. So teach them the value of delaying gratification. Heed the third basic law of money, “Make your gold work for you. Make an army of golden slaves before you buy luxury.” And please, differentiate what you, as parents, can afford vs. what they can afford.

7. Use financial statements to help them delay gratification. Have them prepare their balance sheet and update it at least every quarter. Once they regularly see how their money grows, they will have an easier time resisting that latest gadget because they know the opportunity cost of not investing. Moreover, seeing their money grow acts as their substitute gratification. And the bonus is, both parents and children will find it easier to cut the cord when the time comes. When all the above steps have been implemented, their balance sheet would already have a healthy sum that will enable them to take their first steps of financial independence.

8. Consider this graduation gift. If you can afford, you may want to give a graduation gift that’s quite substantial (but not too much) to your graduating child. Have some agreed upon parameters on the use of the cash if you want. But that’s it, no more allowance from mommy and daddy.

There, I hope the above steps will help you prepare for the eventual and necessary step of parenting. If the eagles don’t do that final push, their eaglets will never learn how to fly. They will never learn what they are born to do. Think of what you’re depriving your children of by not taking this final step of cutting their financial umbilical cord.

Cheers to high FQ! 

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ANNOUNCEMENTS

1. A great way to prepare your children for the cutting of the financial umbilical cord is to be serious with the honing of their nth intelligence. Watch out for my new book "FQ: The nth Intelligence." Interested parties may contact me for pre-orders and available discounts on packages. 

2. Why don’t you and your kids both take the FQ test challenge? Click link to take the test. http://rebrand.ly/FQTest 

Rose Fres Fausto is a speaker and author of bestselling books "Raising Pinoy Boys" and "The Retelling of The Richest Man in Babylon" (English and Filipino versions). Click this link to read samples – Books of FQ Mom. She is a behavioral economist, a certified gallup strengths coach and the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook & YouTube as FQ Mom, and Twitter & Instagram as theFQMom.

ATTRIBUTIONS: Images from modified to help deliver the message of the article. Descriptions of eagles – from birdhouses101.com, eddyb1213 for the video.