Alright, let's get a bit personal. In Part I, we broke down the responsibilities of self-employment and how independence contrasts with the cushy benefits of traditional employment. Now, in Part II, we’re diving into the connection between family and finances.
But first, this post is about families where internal financial support is the norm. You don't need to tell me that this isn’t everyone’s experience, so if this doesn’t apply to you, then I’m not talking about you.
Now, let’s explore how some parents/caretakers financially support their adult children. Most parents mean well and it's natural to want to help your kids as they step into adulthood. Regardless of the ability to do so, this support ranges from occasional bailouts to fully funding their lifestyle.
The reasons are many: parents might not want their children to struggle as they did, they feel guilty about not being there enough in their childhood, or follow the example set by their own financially generous parents. The intentions vary, but the common thread is the potential harm when lack of financial education merges with financial coddling.
When parents shelter their kids from financial reality, it becomes a crutch. When your family helps you out at every stumble, why struggle with budgeting when you’ve got a safety net? Why learn about investing when someone else is managing the money? This illusion of safety can stunt our financial independence, leaving us unprepared for the future. And let’s be real, no one’s going to rescue you forever.
The Myth of "Family First"
Parents often intend well but shielding us from financial challenges can create a bubble of ignorance. If your family’s mantra is “family first,” it can further complicate things. While it's a blessing to be able to help each other, it can also foster a dangerous expectation that family will always bail you out, leading to poor financial choices, perpetual dependence, and a lack of accountability. In short, you never grow up.
Reflecting on my own family’s relationship with money, I see how it shaped my relationship with money. In the early years, my parents and eldest siblings were in survival mode, meaning everyone had to chip in. As years passed and financial stability came, that survival mindset lingered, turning what was once a necessity into an outdated obligation that often held us back. "Family First" became, you put your families needs above your own and embedded an expectation that you can ask for money and get it.
In my younger years, I knew my father would help me if I needed it, but I also felt the heavy price to pay of guilt and criticism by others. If I asked for support, it had to be in dire situations after I exhausted all my options. It had to be worth the price of hearing about it forever. Although this led to a drive for independence, it also led to the previously mentioned years of poverty. Although I knew "family first" meant I could turn to family, I chose a different meaning for "family first".
In those young adult years, the “family first” concept shifted from “help me” to “how do I avoid becoming a financial burden to my family?” Being employed was one way to be less of a burden, however self-employment really highlighted how being employed was just jumping from family support to employer support (aka a "good job").
In employer support they do all hard work for you. They set up payroll, and you may get benefits like health insurance, 401k, pensions, paid-time off, family leave, tech support, billing, accounting, grievance support, and so on. Just like family, your financial stability relies on someone else working behind the scenes. Once you make the switch to self-employment, you really notice the extent to which you were really not as independent as you thought you were.
The Ugly Side of Generosity
Another layer to this is understanding the double-edged sword of generosity. My father helped many people financially, which made him feel benevolent, noble, and powerful. However, I now see that giving it so freely sent a hidden message that “money is no big deal.” In reality, while money isn’t the most important thing, it is undeniable that it is essential for survival. I see now that my father didn’t value the money he worked so hard for. If he did he would have asked for payback with interest. Now that would have been a valuable money lesson.
Side note: when someone gives or lends you money, you are bound to them. If it’s not given freely (which most people do not do), you have signed a unspoken contract that allows the lender to hold it over your head indefinitely, even after it’s paid back. Some folks like to have that power over others, and generosity is a way to do that in a socially acceptable way.
Hard Lessons
After walking away from being an employee, these reflections have made me realize that familial financial coddling mimics the comfort of a regular paycheck. Whether you are an employee or family member with a safety net, you get used to someone else handling the tough financial responsibilities stuff, so why bother learning about things like setting up a ROTH IRA? When you get soft from all this caretaking, stepping into self-employment can feel like losing your training wheels while speeding downhill, because suddenly, you're in charge of everything which can be overwhelming.
Self-Employment Silver Lining?
Before you panic and cancel your business license, take a deep breath. Every self-employed person has faced these challenges and many have emerged stronger and wiser. Self-employment is an unforgiving but excellent teacher. It forces you to confront your money mindset and take ownership of your financial future. Though daunting, this juggling act is empowering, and you're steering a business that reflects your passions and values. With perseverance, humor, and patience, you'll get through those challenging first years.
When you say goodbye to predictable paychecks, you understand that every dollar earned is a hard-fought victory and you become hyper-aware of income and expenses. It's a rude awakening, scrambling to grasp budgeting basics and tax implications.
Learning to value every dollar, planning for the unexpected, and making decisions with the future in mind might sound daunting, but they’re the building blocks of financial resilience. You might hear family saying, “But you have me to help you out,” and while that’s a blessing, notice if that support is keeping you from being financially resilient and independent.
I’m not anti-help. In fact, asking for help is a skill you’ll have to master when going solo. You’ll need to connect with others to help guide you through the ins and out of running a business. You’ll learn to self-advocate, see your blind spots, and identify areas for growth. And truth be told, none of us are completely independent. Even on our own, we are building off of what other have built, and accessing systems others are in control of. Complete independence is a myth and delusion that has it's own set of complexities.
The initial fear of self-employment will diminish in time, and you’ll feel greater self-confidence when you’ve built something from the ground up. Missteps will teach you to prioritize your financial future, not just immediate wants or needs.
So, take a deep breath, fellow entrepreneurs. This juggling act is part of the self-employment journey. In the end, you may find your balance between accepting help and standing on your own. While it’s comforting to know someone’s got your back, there’s a special kind of self-respect knowing you’ll be able to take care of yourself with no strings attached.
Disclaimer: This blog post is crafted with the assistance of Google Gemini and Chat GPT-4 for research and editing purposes. No advertisements or paid affiliations are associated with its content.
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