Of all the life lessons parents have the opportunity to impart on their children, lessons about money can be among the most challenging. This can be especially true with families where financial success is evident. Familial wealth can give parents access to many resources. But it can also make raising children more difficult.
Being modest about one’s wealth is often looked upon as a virtue. But if this modesty comes at the expense of our children’s financial literacy, then it is undermining our ability to prepare our children to thrive as adults. No matter how well intended this modesty may be, delaying discussions about money can lead children to believe there is something about the conversation, or money, to shy away from, be ashamed of, or simply ignore.
But it doesn’t have to be this way. As with many things in life, it’s about communication.
Children are curious and are continually trying to explore and quantify their world. This curiosity includes matters of money and finance. As a result, they’ve probably started an internal dialog about your family’s specific financial situation already.
Budgeting, setting goals, saving, investing, living within ones means and thriving financially are individual skills that need to be taught and learned. While the numbers are important, the meaning behind the numbers and discussions around those meanings are what will really engage your children. Think about it from a foundational perspective; it’s not about how much your family has, but what the financial success means, the responsibility it brings, and the discussion to be held around it.
It’s worth remembering that these kinds of financial discussions go well beyond the numbers. They create teaching moments and ways to connect with children that can extend well beyond the topic at hand. These conversations are about finances, but they’re also about values.
1. How does having wealth shape how we live?
2. What are the responsibilities that come with wealth?
3. What would happen if it was significantly impacted?
4. How does our wealth reflect our familial values?
5. What, if anything, are we wanting our wealth to accomplish?
As with all discussions, respect is essential. Always remember you’re speaking ‘with’ your children and not ‘at’ them. This means starting the conversation by meeting them where they are in the current level of understanding and keeping an open mind when considering their questions.
Perhaps the most effective lesson parents can convey to their children about money is by modeling the kind of financial responsibility they want from their children. From the moment they’re born, until way after we think they’re paying attention, children learn through observation.
This financial modeling can be a lifelong lesson. For example, with younger children, consider using cash instead of credit to help teach them about finite resources. With older children, share the cost of larger purchases, including higher priced alternatives, to help contextualize the value of large ticket items.
At the same time, it’s important for parents to remember that children may have been too young (or not yet born) to recall the sacrifices and delayed gratification you made earlier in life. If they’ve never seen you struggle or put off getting the things you want, they may assume success comes easier than it does. Why not use this as an opportunity to share your career story with your children? Remember to not edit out any mistakes or failures you encountered along the way. Children need to know that not every attempt is according to plan, and even accomplished people have experienced setbacks that inspired new direction and learnings and ultimately resulted in success.
We understand that it can feel weird, even unsettling, to have specific conversations about familial wealth with children. However, this can become a good time to explain the idea of “family matters”. Use this as an opportunity to explain how family matters are only discussed with family.
You may find that actively sharing this kind of information, preemptively extending trust with your child, can motivate them in a way that a lecture or stern warning never could. Plus, knowing this information can play an important role in helping children when considering a career path and setting up realistic expectations.
Whether you’re revisiting this discussion with your children, or just getting underway for the first time, take comfort in knowing that it’s a process, and as with all aspects of parenting, there’s no perfect prescription. Through ongoing, open communication with you, powerful conversations around money help build children as good stewards of wealth.
Have a question or interested in continuing the conversation? Send us a note to firstname.lastname@example.org.
Please see important legal disclaimers pertaining to this post by clicking here.