Many of our clients contemplate the best approach to initiate conversations about wealth and other financial topics with the next generation. This can often be a difficult and uncomfortable topic to navigate, particularly for decisions concerning when to begin to instill financial responsibility in children. While every family and situation is unique, our experience working with multi-generational families gives us an informed perspective. Our general view is that it is important to talk to children about family values and your beliefs about wealth in their formative years, in age appropriate ways. Here are some tips to put your children on the path to financial responsibility:
Begin at a young age. Instilling the idea of value and budgeting can start early with simple games such as playing store with your child or asking them to guess the price of a good at a store or online. As they mature, a fixed allowance can help with the concept of saving for a larger purchase and the satisfaction of achieving a goal. Age-appropriate part-time jobs can also teach the connection between work and compensation.
Provide education. Basic knowledge of financial terms and financial institutions often begins at home. While some states require financial literacy as part of the high school curriculum, many, including New York and Connecticut, do not. Opening up a checking and savings account for your children can help foster a sense of independence and responsibility while also instilling knowledge. Introducing your children to your financial advisors allows them to begin building their own financial relationships and allows access to a teaching resource. Many financial institutions offer credit or debit cards, or other payment systems for children, with appropriate guardrails, that can help them learn about transactional finance.
Be firm. If you set a budget for your children or provide a fixed allowance, try to be consistent. While it can be tough to deny your children something they have their heart set on, always allowing them to experience ”yes” and immediate gratification could undermine the important lessons of financial responsibility, saving, and budgeting you wish to instill.
Communicate your legacy and values. Share the history and personal stories of how your family accumulated wealth. If your family is philanthropic, demonstrate the spirit of giving in visible ways, such as volunteering or donating physical goods. For older children, create opportunities for them to make decisions about charitable giving. If your goal is to leave a lasting legacy in some way, let them know so they can “carry the standard” and pass it on to future generations.
Klingenstein Fields Advisors is here to support you and your family in preserving and protecting your wealth. We encourage you to consider us as your trusted resource to help facilitate these important family conversations. For more information, please contact us directly by phone at 212.492.7000 or email us at email@example.com. You’ll find News and Insights on our website and can view our educational webinars on a variety of financial topics on our YouTube channel. And please don’t forget to follow us on LinkedIn, Instagram, and Twitter.