Sunday, 9 September 2018

The Worst Parents Video and Some Thoughts

There is this latest marketing video by NTUC Income about retirement planning that is very well-received.

'The Worst Parents in The World' video by NTUC Income

The advertising message aside. Being a new parent myself, this video does strike a chord with me and made my eyes teary at some scenes.

Naturally a video like this would achieve more than just selling or marketing something. To create long-lasting, maximum impact it needs to trigger some deep thoughts and subsequently, actions. NTUC says that it aims to 'challenge the notion of what 'best' meant, and get viewers to reflect if being financially secure could in fact be the best gift that parents can offer to their children'.

Parents Often Over Provide for Children
The recent AC Nielson study commissioned by NTUC that inspired this video confirmed that 'parents were motivated to place children's future over theirs and would continue to do so.'

Parents sometimes go overboard and over-indulge their young ones by giving the best of everything. The most branded formula milk, the most well-known enrichment class, the best tutor, the best school. In a society as affluent as Spore, these are usually associated with the material side of things.

No doubt these stem from our unconditional love for children, and wanting the best in everything for him/her. Its just human nature. But I feel parents should try to maintain some sanity and achieve a balance, between placing kids too high on the priorities scale and providing what are best for them within one's financial means.

We just have to be conscious about tendency to over-provide, and always assess critically especially on the big ticket items. We need to incorporate checks into the decision-making, often take a break and ask the hard questions such as 'is this really necessary?', 'what out-sized benefit does this bring to my child such that it outweighs the cost we are incurring?'.

This will not be easy, as we are bringing the left brain into a very often right-brain-dominated decision. Worse is sometimes we may even 'reason' our way out to justify these expenditures, using our right brain unknowingly.

Its fortunate that me and my wife are quite aligned in these aspects such that we can make rational decisions together, becoming the check and balance towards each other.

Major Financial Decisions Today have Ramifications in Future
Some spending are recurring, some would trigger/spawn further bigger commitments down the road.

While parents provide for kids wholeheartedly without expecting returns (most of time), over-doing it has ramifications on the parents' future. For example, helping to settle the down-payment of flats for children, or footing the bill for wedding expenses. These cause an immediate dent in parents' financials, and in the long term delay/impact their retirement planning.

These inadvertently create pressure on children to provide for parents in future. Some kids could not pursue their aspiration, relocate, have a mid-career change due to the tacit expectation exerted on them not by the parents, but by the life situations.

Recently my Father-in-law was exploring various options of better monetising its fully-paid up flat to secure his retirement. Underlying these actions is his desire to not be a burden to me and my wife.

It is fortunate that he still have some wriggling room to find a retirement solution that suits him. But many parents, do not have such luxury and they either have to keep working to earn his keep, and rely on kids' allowance - the sandwich class that often feels financially stretched.

Some of these issues could have been avoided should there be more planning, financial literacy, smart investments done during the kids' growing up phase 30 years ago where parents do not over-provide and stretch their finances really thin.

Parents This Age can Prevent Same Situation in Future
We are definitely way ahead than our parents' generation in terms of awareness and literacy level of wealth planning and financial management. Information are readily available online, investment options are much more diverse.

Conversely we are also more at risk of over-providing due to much greater affluence and a consumeristic society.

Based on my interaction with clients and peers observation, increased wealth management knowledge and availability of investment options, still do not translate to an urgency in retirement planning and corresponding actions. Perhaps its due to competing priorities at different stages of life. And retirement planning sounds so distant away that one assume it can be out on hold till other more important life issues are settled, then come back to work on it.

But retirement planning is an issue that the earlier you start, the easier it is, and the better future results one will get due to long runway for snowballing. Look at it this way, its something one has to do sooner or later, and the earlier one embarks on it, the easier it is.

So why not start now?

I hope that the young working adults today can recognise the single biggest advantage they have on retirement planning - time, and make good use of it. Make an informed decision on the right wealth instruments to grow wealth towards retirement, plus a holistic multi-asset investment approach with proper asset protection put in place, it is a journey that will be fruitful.




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