Family wealth is obvious to children.  Your expectations surrounding how your children will handle the family’s wealth are not so obvious.  So, it’s important to talk with your children about the family’s goals for this wealth in a way that will allow you both to think creatively about how best to steward that wealth into the future.

Money itself and the language of money is straightforward; it’s literal, it’s not rocket science.  But talking about money can get complicated.  When you add emotion and experience – good and bad – to the discussion of money, that’s when it can get complicated.

Here are five tips to help you start this money talk :

1. Talk about the elephant in the room

Children who grow up in an environment of wealth are, after all, just children growing up.  They rarely see their circumstances as anything other than the norm.  As they get older, they become aware of the wealth surrounding them, but not necessarily how to live with that wealth responsibly.

Sharing the story of how the family wealth was created is a good start to helping your children understand how money is earned, which can help to eliminate any anxiety about the loss of family wealth.  Talking at family dinners about how family wealth can be used to not only keep the family comfortable, but also to help move others forward helps your child to see that family wealth is about more than just the family.

2. Teach them basic money rules

Having family wealth will not protect a child that cannot live within his or her means.  Financial education will do that.  Talk with your child about the choices they have for money and the importance of setting goals for those choices. Teach them to save and to pay themselves first so they always have options.  Give them a conditional allowance so they understand how to budget.  When they are old enough (mid-teens) take them with you when you meet with your financial advisors so they are comfortable asking for help and education about the money in their lives.

3. Model the money behavior you want to see in your child

As a general rule, actions speak louder than words.  Share with your children how a family purchase does not just happen – it takes saving, research and planning.  Enlist their help with your own family budgeting and engage them in being a good steward of your money or theirs by giving them responsibilities to help the family save towards a family goal.  Assign your youngest the responsibility to turn off all lights in rooms not in use – thus saving money and precious resources. Older children can help by getting a job to earn money towards their expenses so the family’s budget can take on other money goals like philanthropy.

Children will watch and embrace what they their parents do with money.  Be aware that this is happening and utilize this as an important way to further define your true money values

4. Enlist others to reinforce your money mantras

Grandparents tell me that they want to do a better job with their grandchildren than they did with their children.  (They also tell me that they would have had them first if they’d known how much fun they were!)

Grandparents have the perspective and the experience to help you reinforce your desired money messages with your children.  Grandparents have an unconditional voice that is often “heard” more easily than a parent’s voice.  Engage grandparents to reinforce family philanthropy, values and goals.  Make them a part of your team as you begin to translate your family wealth in terms your children can understand.

5. It’s never too late to start – even to start again

Developing knowledge of and skill in handling money effectively is a life-long marathon, not a sprint.  Money-related milestones will happen throughout your child’s life.  Each one is an opportunity to teach and to learn.  Establish the habit of talking about family wealth early and often so your children know that their first stop for input is you so they openly talk about the money questions they have so they (with your help) can better plan to manage the outcome.

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Written by Susan Beacham
Susan Beacham founded Money Savvy Generation in 1999 after almost two decades in private banking and investment management complemented by considerable time teaching at the elementary level.

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