Financial resilience

Steve Merrell |

Q: I was raised in a home where we didn’t have much. It seemed like Dad was always working to pay the bills and Mom was always working to keep the family together. They did their best, but I always felt a little like we were on the edge of disaster. I want something better for my family. How do I help my children develop a sense of financial security?


A: Before I get into a discussion about helping children feel more financially secure, I want to commend you for your desire to build on the foundation your parents left you. The ethic of each generation improving on the previous generation is one of the great hallmarks of our society. Hopefully we never take that for granted.


Your desire stands in sharp contrast to a conversation I had with a very successful attorney several years ago. I mentioned the idea of leaving the world a better place for the rising generation. She surprised me by saying, in effect, that she had given up on that sort of idealism. Now that her children were raised, she was going to live her own life and her kids would have to figure it out for themselves. She was not yet a grandmother, but I asked about her future grandkids. She said that was someone else’s problem.


In contrast, as a father of five and grandfather of four (almost five), I feel a very keen interest in the kind of world they inherit. And while much of what I see in today’s world troubles me, I also see great reason for optimism. It is this connection between living optimistically while remaining conscious to life’s dangers that gets to the heart of how we help our children stay healthy—emotionally, socially and financially—in a very complex world. The key is to teach them correct principles, including how to be resilient.


Resilience is the ability to adapt to the vagaries of life in a constructive way. It is the capacity to recover quickly from difficulties. It is a kind of mental and emotional toughness that acknowledges hardship but refuses to be cowed by it. In my mind, the question isn’t so much how we instill a sense of financial security in our kids as it is, how do we help them develop financial resilience.


The best way to teach our children is to model healthy living—including following sound financial principles. When financial reversals hit—and they almost always do at some point—our children will see our resilience and learn to incorporate it into their lives.


You can reinforce your message by intentionally drawing attention to it. For example, if you experience a layoff, you can say something like, “Layoffs are a real bummer, but I am so glad we put aside an emergency reserve to carry us through times like this.”


Correct financial principles enhance our resilience. Such principles include living within our means, saving for a rainy day, saving for retirement, avoiding consumer debt, avoiding excessive student debt, getting an education, staying current with your education, investing properly, carrying enough (but not too much) insurance, making do with what you have, and doing without things that don’t support your core values.


One of the most important things you can do to enhance your financial resilience is to develop and keep current with your financial plan. A financial plan will show you how all the pieces in your financial life fit together. It is also a great vehicle for teaching kids to be financially resilient by giving them a better foundation for understanding the financial decisions you make.



Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., an independent wealth management firm in Monterey.   He welcomes questions you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to