In my Senior Seminar class at Mount Mercy University we are reading "Good to Great" by Jim Collins. Chapter 2 is on Level 5 Leadership. As I read this chapter, I couldn’t help but to think how each one of us can be a leader in personal finance and how we can take some of the principles from Jim Collins and apply them to our daily lives. Collins describes a Level 5 Leader as someone who “builds enduring greatness through a paradoxical blend of personal humility and professional will.” We all want our families to be successful and I want my kids to be more successful than me (building enduring greatness).
A central theme of this chapter is setting up the company for future success and not worrying about individual success. Our last blog entry was on how much money it will take to retire so I naturally put the two together. I want my kids to be able to retire and live successful lives, so I want to set them up for future success. The questions are how do I do that and am I doing the right things.
What we decided to do is a Roth IRA "parent match"; matching up to a certain dollar amount each year, dollar for dollar, that the kids put into a Roth. For the kids, they are doubling their money. For us (the parents) we are giving them their inheritance early and hopefully instilling in them the importance to save for retirement. At age 17, Clay has a Roth IRA which will be tax free income when he retires. Fifty years of compounding will really cause his Roth IRA to grow.
We have also helped the parents of our grandchildren to set up 529 college savings. I know it doesn’t sound exciting, but at Christmas and birthdays, we contribute to their 529 accounts. We like to look at it as long-term love. Over 15-18 years, 3-year-old Jordan’s and 5-month-old Emmy's money will grow and ease some of the cost of a college education.
So I guess what I’m trying to say and do is that it is not so much about us anymore as it is about the future of our family. We all try to do the right things, share our love, and now share our knowledge and finances. We make a comfortable living and it would be nice to have more, but I would rather cut back a little so we can help the kids and grandkids with their future expenses and saving goals; in personal finance and leadership, taking our family from "Good to Great".