Parents and Grandparents often hope younger family members will instinctively carry on their financial ideals. But children don’t learn financial discipline and values purely through observation. They need guidance and real-world experience.
Articulate Your Values
Before you can relay your financial ideals to younger generations, establish what you want to communicate. Think about what formed your own perceptions about the value and purpose of money. For example, what are your views about the importance of preserving the family’s wealth for future generations versus changing the world through philanthropy? What messages do your family’s current lifestyle and financial activities send to your children or grandchildren?
There’s no single “right” response to these questions. Indeed, spouses may answer them differently. Discussing your values can clarify your thoughts and help avoid sending mixed messages to the kids. You may even find it useful to write a mission statement that describes your family’s vision and goals in business and in philanthropic ventures.
Talk Openly About Money
Parents may hesitate to discuss finances with their children because they worry it will foster a sense of entitlement or that personal information will be revealed to others. Of course, you don’t have to disclose the family’s financial holdings to a six-year old or review your tax return with a teenager. But children need to talk to their parents about all the important things in life, and money is one of them. Candid discussions about financial responsibility and wealth management are as critical as conversations about career choices and academic pursuits.
Find Lessons In Experiences
Your everyday financial decisions — the food and clothes you buy, the vacations you take, the charitable donations and investments you make — all influence how your children and grandchildren view wealth. Talk to them about how these choices reflect your financial values. For example, discussing how you decided to spend more (or less) on a family vacation is a chance to explain how you judge whether a purchase provides value for the money. Talking about why you support a particular philanthropic cause helps them understand the emotional rewards of charitable giving.
Teaching Opportunities
Children often learn through experience. Here are three financial experiences you can provide:
- Give An Allowance
Letting children have and spend their own money can help teach comparison-shopping, budgeting, saving and investing. - Open A Bank Account
You can teach them about earning interest and making deposits and withdrawals. it’s also an opportunity to explain how to balance a checkbook or manage online accounts. - Encourage Charitable Giving
Sites like Kiva.org let you browse projects and organizations with your kids, so they can help you decide where to give.
