A man walks by a wall of currency at Frost Bank. Photo by Scott Ball.
A man walks by the "Money Museum" at Frost Bank, a collection of coins and currency dating back to 1536. Credit: Scott Ball / San Antonio Report

The idea of embarking on an adventure into the unknown is appealing, even romantic to some. Heading out in into the world with no particular destination in mind can be the source of great excitement. But such an adventure is not advisable when it comes to your personal finances – That road is best traveled with a reliable map.

Though the process isn’t very complex and could even be achieved without a calculator, many individuals fail to map out their financial future. Many of us have common financial goals, such as saving for retirement, kids’ college, or a new home, contributing to charitable causes, and gaining financial stability. So why do so few individuals map out financial goals and strategies for achieving them them? It is one of life’s many mysteries.

No matter how great or small your assets are, clearly defining financial goals is the first step in achieving them. Outlining specific objectives can provide a solid foundation and motivation to stay on track.

As a financial adviser, I’ve worked with many individuals – women especially – who fail to accept their adult children’s financial stability as one of their own financial goals, yet they strain their own financial security by monetarily supporting their children’s adventures. Few can afford that, generally speaking. It’s a bad situation, in which parents do themselves as well as their adult children a disservice.

One of the most complex financial “adventures” is giving children capital to start a business. This is not advised without serious consideration as startup businesses burn a lot of money, especially in the beginning. While it may seem practical to help an adult child rebuild after a job loss or cope with financial challenges through a startup business, it usually is not.

I strongly advise against doing so without first seeking professional advice regarding the strength of your own financial situation and getting experienced input on the viability of the new business.

There are resources, both financial and informational, for startup businesses, and children should seek and utilize these resources instead of relying on the parental piggy bank. Not only is it good discipline, it’s good business. The financial plan requirements of small business lenders and their practice of matching borrowers with mentors and consultants puts that new business on much more solid footing. Any business owner needs basic knowledge of accounting and labor and tax laws. Most parents cannot provide these things. It is much better for aspiring entrepreneurs to start off their new business like, well, a business, and not a new hobby to share with their parents.

If you do decide to put your capital into your child’s business, do it as a loan with clear legal terms and an interest rate. Again, this is part of the expense of starting a business. Potential lenders will be more likely to invest in a business if its owner has previously met financial obligations as opposed to leaning on Mom and Dad’s funding.

If you do decide to help your child out financially, make it clear that you too will benefit from the venture if it proves successful. It’s good to be optimistic, but one must also be realistic. If your child does start the next Microsoft, and it was with your money, you, too, want to be on the Forbes list of wealthiest individuals. Legally and financially partnering with your kids is risky, but it beats setting them up for failure through too much indulgence.

My advice for a stable financial future: Get yourself a road map and stay on course.

Jeanie Wyatt

Jeanie Wyatt is the founder, chief executive officer and chief investment officer of South Texas Money Management.