Blog | Personal Finance

The Best Mother’s Day Gift You Could Ever Give

A financial education, not a 401(k) plan, is the key to helping mom enjoy her retirement

A young journalist approached me recently and said quite passionately: “We have to make women aware that they have to take charge of their money. They cannot depend on someone else to do that for them!”

After talking with her more I discovered where her passion was coming from. It turns out her 54-year-old mother recently divorced. She was left with basically nothing and had now moved in with her daughter. Her daughter was now supporting herself and her mother.

This situation alone was a wake-up call for the young journalist, and it shook her up. In looking ahead, she then realized that if her steady paycheck stopped, she had a total of about $7,000 to fall back on. She was suddenly propelled into action — and eager to spread the word how important a financial education is.

Why a man is not a plan

The statistics about women and money are very startling. The following are five U.S. statistics, yet I find that for other countries throughout the world these statistics are either very similar or are trending in the same direction.

• 47% of women over the age of 50 are single, which means they are financially responsible for themselves.

• Women’s retirement income is less than that of men because a woman is away from the work force an average of 14.7 years as compared to 1.6 years for men (women are typically the primary caretakers of the home). This, along with lower salaries (women earn roughly $0.80 on the dollar throughout their careers compared to men), adds up to retirement benefits that are only about 1/4 of those of men.

• About 40-50% of marriages end in divorce. And who typically ends up with the children? The woman. So now she is solely financially responsible for herself — and her children.

• The standard of living for women who divorce after 50 drops an average of 44%, according to AARP (and only drops 21% or men).

• The average American woman lives five years longer than the average American man — which means women must provide for their extra years.

No more fairytales

What are these statistics telling us? They tell us that more and more women, especially as they become older, are not educated or prepared to take care of themselves financially. We’ve spent our entire lives taking care of our families but have no ability to care for ourselves in this vital way. We are either depending upon someone else to do it for us — a husband or partner, a boss, a family member, or the government. Or we just figure that it will all work out. The fairy tales we grew up with were just that.

It’s time for women to stop living in the fairytale that they will be taken care of by others their whole life. The statistics simply prove that is not true. It’s time for women to rise up and learn how to take care of themselves financially (and otherwise).

Help Mom take charge of her future

“Setting up a retirement plan, and sticking to it, is a Mother’s Day gift that will last a lifetime.” So says Penelope Wang, in an article written for Money magazine.

In this article, Wang makes the case for skipping the classic Mother’s Day gifts — flowers and brunch — this year to instead take a look at her retirement plan.“Granted, 401(k)s are nobody’s first-choice topic on Mother’s Day,” she writes.“But it’s a discussion you don’t want to put off too long.”

But is a 401(k) plan really the answer to this problem? Especially when you have to check in to make sure your mom even has one? Not a chance.

Odds are that if you’re at the point where you have to spend Mother’s Day helping your mom think through her retirement, the concept of a 401(k) plan is too little too late. Assuming the average adult in their 30s is finally mature enough to start thinking about his or her mom’s retirement, that would put the woman in question at around 50 to 60 years old. At that point, if your mother hasn’t been saving and investing for some time in a 401(k), starting now isn’t going to help much come retirement time. Between the fees and inflation, she’d have to be socking a lot of money away each month to make a dent. It’s hard enough to be ready for retirement when you invest in a 401(k) plan most of your life, let alone in your later years.

The financial myth that, “Even if you have only small amounts to put away right now, those dollars will grow over time,” is generic advice that sounds great on paper but is a disaster in practice. So no, mom doesn’t need you to start a 401(k) as part of her Mother’s Day gifts. What she needs is to understand that the old way of thinking about money won’t work for her — or her retirement.

Saving vs. investing: Savers are losers

One of the phrases you’ll often hear Robert say is, “Savers are losers.” This statement can come as a surprise to people who have always been told that saving vs investing is the smart thing to do.

This brings up an important distinction between two different concepts: 1) saving money in the short term and then moving that money into a sound investment 2) saving for the long term and investing in supposedly “safe” investments — such as stocks, bonds and mutual funds (like 401(k) plans).

I say “supposedly safe” because the types of long-term investments listed above are not really safer than any other investment, they are just easier. They require less financial education but carry the risk that comes from having almost no control over your investment. They also don’t give very good returns compared to more hands-on investments like real estate or owning a business.

When mom saves her money in a 401(k) plan, she’s at a huge investing disadvantage — low returns and no control. There’s got to be a better way for mom, right?

Saving vs. investing: Investors are winners

Wise investors save for the short term, then use that money to buy investments that bring in regular cash flow— and mom should be doing this, too. The beauty of cash flow is:

1. It keeps coming in continually (assuming the asset is managed well) so you don’t have to worry about it running out, and

2. You can raise prices (like the rent on your real estate properties or the price of your business’s products), which means your cash flow income keeps pace with inflation.

Once you have cash flowing in each month, mom will no longer be reliant on paychecks, raises and all those aforementioned savings accounts that yield negligible results. She’ll quickly see how saving vs investing makes so much more financial sense.

Gifts for mom that provide a financial education

To invest in ways that bring you good returns and reliable cash flow, the first step is to become financially educated enough to find, buy, and manage good investments. If you neglect your financial education, your options are limited to investments where you have little control and could be left in the cold in your retirement years.

Since I believe in living abundantly, I’ll say that not only should you get flowers and brunch as Mother’s Day gifts, but you should also give her the gift of financial education so she can grow her money and have it work for her!

As such, here are my top gifts for mom, which all tie back to giving the gift of a financial education:

1. Books. Reading is obviously one of the best ways to learn new material, which is why I penned It’s Rising Time. Think of this book as a battle cry for all women around the world to rise above their obstacles, rise beyond where they think they can go, and rise up to their financial genius. I use a straightforward approach to help women like your mom find courage, overcome the confusion, and build the confidence they need to realize their financial dreams. I also share my own personal business and investing experiences, along with other women’s real-life stories. This book serves as a call for women everywhere to take an inside look into the personal challenges, the setbacks, the comedy, and the triumphs that will lead to the rich life they deserve. It’s empowering, actionable and easy to read.

2. Games.After your mom is finished reading It’s Rising Time and understands the basics of saving vs investing, she’ll be ready for a rousing game of CASHFLOW® Classic. Robert and I strongly believe that the best learning is accomplished by doing the real thing, and that’s exactly what this game delivers — it teaches the basics of investing through real-world scenarios that allow you to test your financial knowledge and learn from your mistakes. The best part? You’ll do this in a safe environment, with no real money on the line. Plus, playing CASHFLOW can show you how to see opportunities where you previously couldn’t see them. Free, online games are played 24 hours a day, 7 days a week — your mom just needs a desktop, tablet or smartphone device, plus an Internet connection. Might I suggest you play a few games with her? It’s a great bonding experience and you may even learn a few things yourself.

3. Online classes. Whether mom is barely able to cover her bills and monthly expenses (let alone worry about saving for retirement) or hates her current job and feels trapped because she can’t find a more enjoyable and/or higher-paying job, then real estate investing classes will give her the hope and knowledge she needs to make a change. For more than 30 years, Rich Dad has helped millions of people just like your mom take control of their finances through a variety of investing and personal development workshops. Some titles for beginners that might interest her include “How to Create Real Estate Cash Flow,” “Choose to Be Rich,” and “Start Building Your Financial Fortune.”

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As Robert always says, “All of us have the power of choice. I choose to be rich, and I make that choice every day.” Help your mom find her path toward financial freedom by setting her up with the financial education she never received — these three Mother’s Day gifts could change the entire trajectory of her life.