Talking to children about money and family wealth
Guidelines for developing financial literacy
Money management is a critical skill that children will need as they step into adulthood—particularly if they are set to inherit significant wealth. Yet it is not taught in most schools, and many families find talking about money with children uncomfortable or simply aren’t sure how to best approach the topic with their children at various ages. So how to begin?
Children learn about money and develop a set of values whether or not these are explicitly taught. Studies have shown that, by first grade, children can rank their classmates and peers in wealth based on the houses they live in and the cars their parents drive. Even if you’re not talking to your kids about money, they are picking up cues.
Educating children about money can be left to chance or guided more purposely. Many wealthy families fear that giving children too much information about money too early on will encourage entitlement and deplete drive. Children will eventually need this information, but when and where to begin?
Getting clear
Family wealth education begins with being clear about your own money values, current financial situation and hopes for the future. If you are co-parenting, try to get on the same page with your partner when possible, to avoid sending mixed messages.
Thinking about your own feelings, experiences and behaviors related to money, and then modeling your priorities, can help you be deliberate with the lessons you teach your children.
As you begin to articulate your values around money and wealth, decide what you would like to pass on to your children, and what no longer serves you.
General guidelines
When children first learn to walk, parents often want to prevent them from falling, but too much oversight can inhibit their progress. The same applies to children learning about money; they need a safe environment to make mistakes and build their knowledge.
Assemble a team of one or more family members and friends who can offer information and experiences that will add to your child’s financial education. As your child matures, the group can include professional advisors.
Successful teaching techniques include:
- Guide and supervise, don’t direct and dictate
- Compliment good behaviors, and use mistakes as a learning opportunity
- Be consistent, fair and willing to listen
- Model the behaviors you want to see
- Meet regularly to discuss these topics
Age-specific guidelines
Do not be discouraged if you haven’t started. Much of the guidance below applies across age categories. Focus on what resonates most with you and your family.
As your children transition into young adulthood, you can still support them in developing healthy money management habits as they aim for financial independence, including:
- Having the right digital tools in place to easily monitor their accounts
- Using credit cards to establish good credit
- Opening investment accounts and introducingyour children to your financial advisor to discuss investment ideas
Begin to paint the broader picture of your family’s financial situation, which could include structures such as trusts. Explain your priorities for these and the family wealth in general. For example, you may be willing to help out with higher education, a business venture or housing, but are not willing to offer an ongoing subsidy.
Be realistic
When taking on the challenge of teaching children about money, the bottom line is to remain patient with yourself and be realistic. Teaching children about money and wealth is complex, and there is no one right way to do it. Start with your values and move forward from there.
Dive deeper
For more information about talking to children about money,downloadTeaching children about money.See also our publication,Teaching children about money at different ages and stages
. Connect with a ۶Ƶ Financial Advisor to learn more about resources to support family conversations about money and wealth.
Get in touch
Together, we can help you pursue what’s important
Are you a client?
