For some people—especially those with considerable wealth—talking about money is difficult. Some families believe it’s inappropriate to talk about money, or that it’s simply not the kids’ business to know what the family’s assets are. For children with wealth, it’s important to understand the various ways money functions in today’s society.
As trusted advisers we encourage having a well-crafted approach to the “money talk”. In our experience this provides the foundation that will sustain a families wealth and legacy for future generations.
Where to Start: Developing Family Values
Every family’s values are different. Some may be dedicated to philanthropy while others may be about working as hard as you can. The first step is taking a good look at your own behaviors and values:
- Are you consistent about spending, investing, and giving money away?
- Do you tell your kids to spend judiciously but are extravagant on yourself?
- Do you demonstrate the difference between wants and needs?
- Do you have your own written financial plan?
The goal is to help your kids create a purposeful life that reflects what’s important to the family. Additionally, you want to be able to protect your children—and eventually grown adults—from people who might take advantage. The more you know about finance, the less likely your children will be manipulated into investing all their money in a dubious scheme or engaging in illegal activities.
The 5 Key Financial Traits
Financial professionals identify 5 key traits that will help children with wealth succeed now—and in the future.
- Learn how to save. If your kids and grandkids don’t know how to put off instant gratification and save for something meaningful—whether it’s a car or a donation to charity—then there is the potential to squander their inheritance.
- Learn how to manage money. What do you do when you have an inheritance, investment income, perhaps a salary, and possibly employees? What can you do to maximize your funds rather than deplete them? Sure, you can hire financial advisors, tax experts, and staff to manage your wealth. However, hands-on knowledge will help your children to understand the power of compounding interest, how mortgages and loans work, and how to leverage other investments, such as property, to continue to build their wealth.
- How to be paid your true value. Most people enjoy contributing to something useful, whether it’s the family business, a start-up they helped create, or a foundation. Understanding money gives you negotiating skills and insight into the value of your contributions.
- How to handle credit. As a wealth generation and business tool, credit can help you build a financial empire. Used inappropriately, credit can decimate even large estates.
- How to speak the language. Just like other industries, finance, investing, and money management have their own distinct languages. Identifying financial mentors who can present age-appropriate concepts throughout the years will give your children a significant advantage as they begin to spend and invest their wealth.
We believe that families who devote time and effort to understanding and defining their financial heritage will sustain their wealth for generations.
Through heritage planning, we ensure that your family members are prepared to receive their inheritance. We mentor and train your loved ones in money management, leadership, and other key skills. We also encourage communication across all generations, so your family is united in its mission and goals. Find out how talking to your kids now can make a difference for your family for generations to come.