I can recall sitting with a family of wealth and discussing their frustration with their children, who never seemed to have sufficient resources and were always in need of a large capital expenditure. Mom and Dad were getting frustrated with having to continuously help the kids and wondered when they were going to be able to stand on their own. They shared with me a particular frustration with vehicle purchases. My clients had arrived in a recently purchased Lexus SUV; it was a good-looking car, fully appointed and very comfortable. It was also four years old when they purchased it. The father said he never purchased new cars, because as soon as you drove them off the lot, they depreciated in value to a third of what you paid for them. Despite explicitly explaining his philosophy, he couldn't convince his children to buy used vehicles; they kept buying new vehicles. As the children never had the resources to buy those new cars on their own, they asked Mom and Dad for help.His story particularly resonated with me because my wife and I had just been out shopping for a car. She was insistent that the car should be equipped with the latest safety device, ABS brakes, because we were traveling with our young children in the vehicle. (I'm showing my age here - there was a time ABS was an expensive option, not standard equipment)! This option was not available in very many used cars at that time. She also wanted to make sure it had full airbags and the car had tested well for side and rear impact collisions. Again, these were features generally not available in the used older cars we were looking at, only in the new cars that were more expensive. In the end, we purchased a new car and had to take a loan out to pay for it, as it was more than we could afford to pay outright. As I signed the note for the car, I thought about my client's admonition to his children.Is there more than one lesson in this story? Were my client's children and I just experiencing wealth differently than our parents had? For our parents, were they simply a generation that knew the depravity of the great depression and had learned to do without unless they could pay cash? Is it the pressure for the younger generation to 'keep up with the Jones', or is it a new standard of normal that simply demands a higher lifestyle than our parents experienced? Can the 'new economy' generation learn from the old?If credit card bills, large mortgages, and continual car payments are to become the new normal, doesn't it mean that we must still apply habits and skills to reduce the debt as quickly as possible? As personal finances become more complex, isn't it more important that we project cash flow on a weekly, monthly, and annual basis to assure that we can afford the debt we take on in order to avoid a trip to the "Bank of Mom and Dad"? Logic seems to tell us "yes".
