In September, the Center for Women & Wealth hosted a dinner and discussion in Chicago focused on the steps families can take to raise responsible stewards of wealth. Bryn Mars (profiled in this issue’s “Five Questions” series) shared her family’s successful practices for speaking with children about wealth and instilling strong values and work ethic within a wealthy family. Some of the key lessons learned were:
There is power in a peer group. When Mars was 18 years old, she and her cousins learned about the family’s wealth and began their financial education together. Mars found that having a peer group of cousins to learn alongside was tremendously helpful – they shared questions and ideas and made pacts to better each other along the way. Teaching children about wealth in sibling or cousin groups can foster helpful alliances.
Professional advisors are important. Sometimes, children are too emotionally charged on topics of wealth and responsibility to listen effectively to their parents’ advice. While the role of mom and dad in raising responsible children is, of course, paramount, there are some lessons that are better taught by a professional advisor. When a professional advisor teaches fiscal responsibility (and all that comes with it, such as budgeting and investing), it is easier for children to set emotions aside and learn the technical basics needed to preserve and grow the family’s wealth. For our clients, BBH provides tools and programming focused on financial responsibility and family communication.
Financial competency is necessary. Children do not need to be professional investors, lawyers or economists. However, they should be taught to understand basic concepts surrounding finance, investing, trusts and estate planning.
Children need space to make their own decisions with money. At nearly every stage of life, parents should give children the opportunity to make their own decisions with respect to money. Giving young children the opportunity to make decisions with respect to small – and as they age, increasingly larger – amounts of money teaches the independence and self-restraint needed to be a good steward of wealth.
Communication is critical. Within the context of dividing and distributing family wealth, it can be difficult for children to feel they are being treated fairly if parents do not discuss the reasoning and nuances behind the decisions they make. Especially if family wealth is distributed unequally, parents should discuss the reasons and values behind substantial financial divisions and distributions with their children.
Children learn by watching their parents. If there is any secret recipe to raising a responsible child, it is this: Parents can best demonstrate by their own actions what it means to be a responsible steward of wealth. A parent’s relationship with money and values, demonstrated through his or her actions, will speak volumes.
Know the story. Understanding how the family’s wealth was created can help form a sense of appreciation in generations that did not see the hard work, sacrifice and discipline that went into earning it. For families that own a business, memorializing why the business was created and the vision and values inherent in the business can serve as a helpful guide for future generations.
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