speaker-1 (00:03.146)
Most parents think about legacy in terms of a will, something that you're going to sort out one day when things are a little more settled and you're a little bit more financially stable. But financial planner Lorato Mahasha works with a different idea and she calls it the dual legacy, a legacy that is both financial but also deeply human. And in this episode, we're going to cover the practical foundations that every parent and family needs. And

Often the conversations that people are avoiding and also surprising ways to start building a legacy. So I'm really, really excited for this episode because I think when you become a parent, the one thing that is top of mind is how do I take care of my child financially? How do I get them the best education? And how do I prepare them for a world where I may not be there? And that's what we're going to be talking about today. So a huge and very warm welcome to you, Lorato.

speaker-0 (00:58.21)
Thank you so much, Meg. pleasure to be here and hello to everyone out there who's listening.

speaker-1 (01:03.438)
Excellent. So most parents do think about legacy in terms of money. And that's what we think about. We think about what are we going to leave behind in our will, basically. But you work with this very different concept called the dual legacy. Can you tell us a little bit more about that? And what are these two legs of this dual part of the legacy?

speaker-0 (01:23.106)
Yeah, of course, absolutely. so yeah, legacy is not just a single idea. in sort of how I incorporate it in terms of my financial planning practice, it has two legs. the first leg being what we all traditionally know it to be, which is your financial legacy. So that's looking at any of your assets, any trusts, any life policies, any properties or anything really that has by its nature has a a legal structure to it.

So it's really what you leave behind for your children. The second then is the values legacy. I think we all are familiar with it, but we don't necessarily think of it as a part of a legacy discussion. So this is really the stories, the work ethic, the generosity, the resilience that you model in your children every day. And therefore it's more of who you leave behind at the end of it all. So most families, I feel over-index on financial legacy.

And they really pay much less attention to what is the the the the values legacy. I think sometimes parents assume that values are caught and they are not taught, which then becomes a very dangerous assumption to make. because as we actually providing for our children, we forget to prepare them. We shield them from any money conversations that we're having. we don't actually explain financial decisions that we make, especially as they grow up and they become a bit more mature.

to them. And then suddenly we become surprised when, you know, they've inherited wealth and that wealth sort of vanishes within a generation. So I think financial the financial legacy is very it it it becomes pop of mind because it's more tangible. Whereas the values legacy is very intangible and it gets pushed to like a a someday, someday I'm going to do this. But in I I know I know the reality I think more than anybody that

Someday actually comes really unexpectedly and it becomes a crisis when it does actually arrive. So you end up building this beautiful financial house, but forget to actually hand over the blueprint of how your children need to live in it. And therefore, that's why the build the Jew legacy is important to actually build on both of these legs simultaneously as one, so that your children don't just inherit wealth, but they also get the wisdom to stew it that way.

speaker-1 (03:46.56)
Yeah, I really love that. And you know, in some respects that's the soft stuff, which is often the more important stuff, you know. And and that you can't they don't it doesn't get taught taught in classrooms. You don't read it in books. It's something that gets transmitted to your children around a dinner table at night. And it's just so incredibly important. So I really, really love that. for many parents, especially those at the rock face with l very little ones.

They may just be surviving month to month right now. They're thinking about school fees, they've got car repayments, they, you know, have got debt on credit cards and everything is just disappearing very, very quickly. To those parents, what is the very first financial habit or structure that they need to put in place that will start to build a legacy and start to build their wealth over time?

speaker-0 (04:35.042)
Hmm. I think a very important question. again, not really a singular approach to it. I think there is a hierarchy to it. the very first leg I would always sort of suggest or recommend is looking at any toxic debt that you might have. When we say toxic debt, what we are referring to is credit cards, store cards, any high interest personal loans. And why we want to target those is that most certainly

those actually have a high interest rate. And that high interest rate in most cases is going to beat any returns that you're going to get from the market. So actually the best investment that you're going to make from the in the from the onset is actually killing off any of those of that toxic debt. Next you want to automate protection and then build sort of like an emergency fund. And I'll break that down shortly. And then thereafter you sort of like the third pillar of it becomes

You want to split your focus between retirement for you and investing for it towards education for them. So when I refer to automating your protection before you automate your savings, really what it is, it's sort of like an oxygen mask, if I can sort of describe it that way in layman's terms. You are your most important income generating asset.

So you actually want to be able to protect that skill set as a parent. And what that means is basically making sure that you have a basic income protector and some basic life cover to an essence. So you always want to just make sure that that is sort of in place. And then you want to look at sort of like a structure where you have a emergency fund. Again, when you're new to something, don't go full on into it unless you can really afford it. Sometimes it just says, it just means sort of

Starting with one month of emergency savings. But what we do prescribe is at least three to six months. And specifically from COVID years, life got a bit hectic for all of us. I think we experienced a lot of trauma. If you can, you actually want to stretch that out to a year's worth of expenses, especially if you have a bigger family and you need to provide for them. So yeah, I think that's really what we then talk about when we when we're talking about then automating into your savings and into your investments.

speaker-0 (06:57.924)
I also think that when you look at your investments, you also want to put them aside and put make sure that they are in an account that is accessible, but not an account that you can just dip into you know, to really renovate your kitchen or something like that. so again, I sort of call it for a fire extinguisher principle. You you hope you never have to use this, but you never you want to know where the fire extinguisher is in the event that emergency actually does occur.

And then a basic will and guardianship needs to be named. And I think those are then the foundations of the hierarchy that I then mentioned in the beginning to build out a good foundation.

speaker-1 (07:37.134)
Amazing. You you really do articulate this so well. one of the things that I often think about is you know, and and you you you've got that whole kind of golden goose scenario, you know, where we are the golden geese and you know, we have to take care of our children. And if we're not okay, then our kids really aren't going to be okay. So early on in our lives, we're thinking about putting money into an education fund versus putting money into a retirement fund. Now, obviously, if we've got our retirement fund.

then we're not going to be dependent on our children. But if we don't give them education, then they're not going to be able to kind of generate money for themselves. So what do you recommend in terms of if a parent's having to make a choice, which one do we prioritize?

speaker-0 (08:19.584)
It's very, very strategic that you actually need to you need to prioritize both, but you do need to obviously prioritize the retirement aspect of it. I always tell parents you can get a student loan to fund an education, but there's no such thing as a retirement loan. and also, I mean, at that point in your life you don't want to be going into debt of that kind to actually have to find your living expenses.

So yeah, basically if you underfund your retirement to fund the private education, you're going to actually end up being a burden on your children for those 30 plus years that you actually need to live through your retirement years. you don't want to and I think the best investment you can make for your children is to be financially independent and allow them to actually be able to become the adults and sort of start their own path into financial independency rather than having to look after you. so yeah, by and large, definitely.

retirement first and then with what's left, we then need to see how we can then allocate that into an education plan or investing of some sort for them.

speaker-1 (09:23.778)
Very interesting. So if I'm thinking about a parent who's in the first five years of their child's life, so retirement feels like it's a a very, very far distance away. And in actual fact, even education is far away. So what is the biggest financial mistake that you see parents make in the first five years of their child's life?

speaker-0 (09:43.142)
it's not something people are gonna like to hear, I think, but it's it's mostly lifestyle inflation disguised as I'm doing it for my child or my children. so people are actually at that point in their lives getting a bigger house, getting a bigger car, you have designer prams, and you have these sometimes very expensive, overindulgent extracurricular activities, and this is all before this child can walk.

Yeah. and don't get me wrong, some families can actually go that far, but it's not for everybody. so you always really just need to be a bit more wise about it. so you don't overstretch yourself financially just to sacrifice liquidity and long-term investing for short-term status. It really yeah, it's really not you're not painting the best of pictures and you're not you might find yourself a bit worse off at the end of it all. So I think in the first five years.

honestly build a foundation. That's all that it is. Income protection, like I alluded to earlier, some adequate life cover, a will and emergency fund, and then starting a small, consistent education investment. everything else honestly is is noise.

speaker-1 (11:00.738)
Yeah. And you know, it's so interesting that you say that because for many years I have spoken to parents about how don't be tempted to fall into the trap of of buying things and getting things that aren't needed. And a few things I'd like to highlight. One is that first pair of Adidas tackies or Nike takies, I swear to you, a child will grow out of it in two weeks. Don't spend the money on it. You know, they're so cute and you know you get tempted. So definitely like don't spend money on swag for your kids because they just outgrow it. There's absolutely no point.

The other thing that you said, which is so true, is we have this deep pressure, even if we're not going to spend money on stuff, that we have to give our children the best start. So we get them into swimming lessons when they're six months old. And language, Mandarin classes at three years old before they can even speak English. Whatever, you know, your your head goes there as a parent because you think the only way they're going to succeed in this world, which is brutal, is if I give them the best start. So now you suddenly start spending all sorts of money.

I mean, I even I hate to say this, but I even think that some private school fees, particularly in the very early years, I mean, look, I'm not saying private schools aren't fabulous and my kids went to private schools and I I definitely do think there is some value there. But looking back, I don't know that I got that much value. I think there's some wonderful government schools that could have done as good a job. So, you know, I think

Just before you jump in and say I've only the best for my child, like is it really necessary? So I love what you're saying there. And I think that is the trap that parents fall into, 100%. Yeah. So I mean, listen already, I'm sure every mother's gonna want your your contact details because you are just sharing so much wisdom. But we've got some more time and I wanna ask you about wills. And this is something that we often don't talk about, although I must say for my husband and I and for my sisters and all my sister in laws and

speaker-0 (12:30.454)
One hundreds.

speaker-1 (12:50.21)
Brother-in-laws, we've been very fastidious on this one piece because we've wanted to make sure that we we do leave our kids. If, you know, if if by if something happened to us, particularly while we were traveling, we leave our children with a plan. So we have always had a letter of wishes, we've had wills, and it's been something that we've been that we've really prioritized from day one. But I don't think all parents do it. So I guess one of the things that would help parents to understand the reason why you should do it is the question of.

What happens to your children if you die without a will? What happens to your children? What happens to their your assets? So can you just walk us through it because I think this will be the motivation for parents to understand they need to get this right?

speaker-0 (13:31.776)
I hope it's the motivation because you honestly do not want to leave this world without a a will and a valid will at that end place. basically it's a very tedious, it's a slow, it's a painful and emotional emotionally draining process. So if you don't have a will, you are defined as having passed into state, which basically means that the state is going to preside over looking over your child or decide for you who's going to look after your child.

And it's often a very lengthy court process. Your assets one are also then frozen. your minor children's inheritances are put in what we refer to as the Guardians Fund. and it's a you don't want money in there. It's a low interest bearing account. just the facilitation of it and the admist administration of it is painful. and you don't want that for your child. That's definitely not a legacy conversation that you want to

be a part of at all. And I think the worst part is that you have no say in it. This magistrate that's going to decide for you does not know you. They don't know the principles or values that you strongly abide by. And they're just going to make a decision or you might end up with family members who, you know, if they know how much, you know, is is in this pot, they're going to be the ones who are just pulling each other apart, just to sort of

make sure that they're the ones who actually get guardianship of your child. But you it's basically you've lost all control and you do not want it.

speaker-1 (15:07.226)
Yeah. No, it's it's terrifying. I mean, it just and you know it's interesting, Lorato. My daughter is is now got you know getting into a relationship that will probably result in marriage. And they've decided to buy a property together. And my husband, who is also a financial planner, his first thing he said, You guys are not married, you guys need a will immediately. Like you do not enter into any type of commitment that is this large, either having a child or having a house without having a will. and so yeah, very good advice. Do you

I mean, out of interest is part of your service that you provide for your clients. Do you actually do wills?

speaker-0 (15:41.666)
We do, we do have a fiduciary offering, so Wills and any trust estate planning, definitely we can assist you with that.

speaker-1 (15:49.56)
Yeah, that's excellent. Another very contentious thing that we had to deal with was actually choosing a guardian. And of course, what does happen often in a marriage is that I think that my sister would potentially be the very best person and my husband thinks potentially his brother would be the very best person. And so it becomes a tussle. And I mean, to be honest with you, we never really tussled because for us it was it became quite obvious around where they were living, who they were married to, whether or not they connected with our children.

You know, w so we for us it it wasn't actually a big contentious point. but what do parents need to consider when they're choosing a guardian to look after their children, should something happen to them, what should they be considering beyond just who loves my kids?

speaker-0 (16:34.808)
Sure. love is always necessary, let's put it out there. And I think you've said very valid things. We've actually sort of answered the question, but love is not sufficient, unfortunately. I think you always need to ask yourselves jointly as a couple, you know, whoever I am going to name, are these people that share my values? You alluded to that. are these people who are financially stable to be able to absorb a child or children?

into their home dynamic now? Or act am I actually now creating a burden for them, which by extension I'm creating a burden for my child. are they in a stable phase of their life or are these per people that are almost going into their retirement years? So does it actually make sense that I'm now going to say, here you are, here's here's a child. I mean, again, you can't, you don't know when when what is going to happen.

but you sort of just have to have it at the back of your mind, given the age gap between you and potentially who you are sort of nominating. and you also want to sort of consider location. I think you also alluded to that to say if your child is in a specific school, a specific community, what is it actually going to mean for them if you uproot them from that when they already are in this particular point in their lives where they are already in a trauma?

they've lost a parent or both their parents. So does it make sense to now uproot them from the stability that they sort of already have and now put them, pla place them elsewhere? So yeah, so those are sort of like the dynamics. But I think the most important thing is that once you have decided on who you're going to name, please tell them or have a discussion with these people because the worst thing is having to surprise someone and all of a sudden

their parents or their parents again when they've just like, it's out of the nest. Now all of a sudden someone's coming back in. So obviously just make sure that people are are prepared and you'll be surprised how many people are often not prepared and like, my God, I had no idea. so please, please, please. that's very big and key as well.

speaker-1 (18:27.926)
Everybody.

speaker-1 (18:43.852)
Yeah, no, absolutely. It's all very, very good points and certainly things that we thought about. I want to go back to your the second leg of your legacy piece, which is the values piece, which I really, really loved what you said. you spoke about the values legacy living alongside the financial legacy. How do we do that? I mean, I mentioned at the end of what you said it happens around the dinner table, but can you give me a sense of like how do we transmit our values around money, around life?

to our children. How do we do that?

speaker-0 (19:17.292)
It's exactly what you've said. it's stories. I think you just wanna be intentional about a value system and how you actually then transmit it. So I'll give you a few examples. Some people have a family mission statement, put it on the fridge, put it on a wall in a common area, whatever it is that makes sense to you guys as family. I've had some people who write a letter.

to their child or to their children, where they explain basically, especially in later years, why they have made certain financial sacrifices, why mommy had to say no to something, why daddy had to say no to something. And you can also document things like any financial failures you've actually had to go through and what you've learned you know, through those particular hurdles. you guys might also have a tradition of maybe you guys volunteer as a family.

and maybe you have a rule that there's a charity jar or something like that and everybody needs to put in some of their money, however the money is earned into this particular charity jar and obviously at a given time you need to go there and don't donate it somewhere. but it's really it's it's the stories. So you want to write down things that predate you how your grandparents started their businesses, for instance.

or how you again f overcame any financial setback. It's especially when you write them down, it lives a bit longer. It it it it's so it's so much easier for them to pass it down. and it's it's a very beautiful memory that they can actually then hold on to. you actually mentioned dinners. legacy dinners are a big thing that some most families actually also do practice. So whether it's key moments in the

in a in a year where we're celebrating someone's birthday, whatever the case, but we just reflect back on, you know, how grandparents the sacrifices that they had to make to put people through school, or how we had to make certain sacrifices, like maybe delaying going to varsity or something like that so that you could put your siblings through school. so it it it doesn't just become sort of like a story. It's it's a values transmission.

speaker-0 (21:33.816)
There's also gratitude and giving. I think what I've seen in most families as well is before you do any planning for the year ahead, you sit down and you want to just reflect on the year that was. and everybody can sort of just tell their share their experience of what it is that they were grateful for and the feeling of giving to someone less fortunate to them, you know, through whatever the charity draw was able to to to help them help.

someone else achieve that type of thing. But yeah, you always want to sort of shift that that that focus from accumulation to stewardship again, which is what this is all about. Because one day your child is going to face their own financial storms and their own financial traumas. And the biggest thing that they want, you want to be able to pass on from that is that there is resilience in this family. It runs in this family and I now know how to overcome it because people before me

on both sides of my family have taught me and told me all these stories of how they overcame it.

speaker-1 (22:36.972)
Lorata, I could listen to you for hours. Honestly. Yeah. I think you're that wisdom is amazing. And, you know, I think it's just it's such conscious parenting. It's thinking about things beyond the here and now. and and it really feeds into the fact that this is all legacy. You know, this is this is what do I leave behind, this definition of legacy, what do I leave behind? And it's not just about the money, it's about so much more. I really love it.

Mm-hmm. So we've come to the end I and I have absolutely loved our conversation. So I'm gonna ask you one last question. If there's a parent who's listening to this and they want to do just one thing this week to improve their family's financial or legacy planning, what would that one thing be?

speaker-0 (23:21.286)
true. again, it's the will, I think. top of mind, that is the single most important document you will ever, ever have. So I would say make sure that you have a will or you get a will. if you do have a will in place and some kind of structure, make sure that your beneficiaries are current and any guardianships in the current will, they make sense to, you know, anything that you might have taken out from this today.

Any same thing applies if you have a retirement policy, any investment accounts, any life policy, make sure that your beneficiaries are current. yeah, I think that would be sort of like the the the biggest thing, especially where you have minor children, guys. We need to make sure that a guardian has been named, that you've spoken to that particular person. and I think that's one of the key, most proactive steps that if you're listening in the next seven days, make sure that you've made that particular appointment.

Like I said earlier, I think we are here. We are Meta Heights Capital. So we are here to help you walk the journey. Whether you are a single parent household, a blended parent household, whatever it is, you're running a business and you also want that to make sense to your estate planning. I don't want to ever make or have someone in a position where they feel overwhelmed by the complexity of you know a financial planning roadmap.

And that's why we as professionals and financial planning professionals sort of exist. It's not just us being able to say recommend a sales and sell a product to you, but we often we help you build a strategy and a roadmap on how to actually achieve these particular financial goals that you have. we help you, you know, perhaps sometimes even ask questions that you might not have necessarily thought about. and the cost of professional advice is.

in more ways than one, often less than the cost of a mistake of doing something that you didn't know you're making or making mistake that you didn't know you that you were making. And I think it's also very beautiful for watching families. I think in my experience, I've been doing this for quite some time, being able to watch parents and watch families move from a space of fear to to confidence, especially when it comes to their to their wealth, their wealth journey.

speaker-0 (25:45.32)
I think it's important that we help parents to realise that there doesn't need to be a million rand in the bank account when you pass away for you to leave a meaningful legacy for your children. you know, there's always has to be a a point where your mind shifts and you need to decide that you are actually just building this little cultural village for yourself. It's just about you and your family and what is it that makes you guys unique.

in your DNA as a family. So there shouldn't be a we're comparing ourselves to the God Kardashians or something ridiculous. In a perfect world, sure. But we live in this world unfortunately. So make sure that you guys are just very intentional about that that culture of who you are as a family and what you want to to be able to take away. And that's really how the the legacy is going to be measured at the end of the day. It's the character that you have built that you've raised in the

These children. It's the values that you've passed on to them and the confidence that you've embedded in them so that they can face their own, their own futures.

speaker-1 (26:53.71)
Amazing. Gosh, Lorato, huge amount of wisdom here. I think our mums and dads have now really got some nuggets from you. and they will definitely be able to get hold of you. So I do thank you so much for this conversation and for being with me here today. And yeah, I hope hopefully w you're gonna get a lot of moms coming to you and saying, Right, come help me. I need to know what to do now. So I appreciate your time.

speaker-0 (27:15.414)
I'm here for you all and thank you so much for having me. It was such a sh such a pleasure.

speaker-1 (27:20.136)
Excellent. Thanks, Lorato.

speaker-0 (27:22.508)
Thank you.