Having Money Conversations With Your Kids - Adviser Investments

Having Money Conversations With Your Kids

Mother and daughter sitting on a couch, talking about how to manage money
Clients tell us they worry about how wealth will impact their children. Some fear that being open about wealth may have a negative effect on their kids’ ambition and work ethic.

Yet transparency and having money conversations with your kids are an important part of estate planning and wealth preservation. And it may bring your family closer together.

In our 30 years serving clients, we’ve guided countless family conversations about trusts, living wills, business succession and estate planning. We’re here to help you when the moment is right. In the meantime, here are some strategies to make money discussions more successful.

Be a role model. Show your children how to be responsible by demonstrating positive fiscal behavior—and talking about it. This can be simple: Make a point of canceling a streaming service your family no longer uses, or discuss the pros and cons of purchasing a car versus leasing one. For teenagers and young adults, explain your rationale for setting up a family trust. And we suggest using your 529 accounts as Exhibit A to teach kids about tax-advantaged investing and the value of compound interest. Sharing real examples from your life opens up opportunities for dialogue and helps pass your fiscal values along to the next generation.

Provide hands-on experience. Involve your children and grandchildren in age-appropriate financial decisions to help them grasp the value of money. Encourage them to save their allowance to purposefully buy something that brings them joy. Have them pay the gratuity at a family dinner. Give older kids skin in the game by letting them invest a small sum in a money market or mutual fund. Actively involving kids in financial decisions and inculcating savings behaviors can be educational—empowering them to take responsibility for their finances.

Be philanthropic. If you are involved in a charity or family foundation, encourage your children to donate some of their savings alongside your own—and explain why the cause is important to you. Even better, let them choose the charity. Philanthropic endeavors reinforce core values such as gratitude and generosity; they also help kids appreciate their financial situation and put wealth into larger context.

Enlist the help of your financial advisor. Young adults may benefit from a more formal conversation, calibrated to their maturity level. Start by including them in one of our planned check-ins to take stock of your family’s wealth plan and long-term objectives. Always reserve time to ask your child about their own plans and financial goals. This structured chat will serve as a foundation for conversations in the years to come.

A conversation can include asking your kids about the future they see for themselves. Some helpful questions include:

  • What do you worry about in life or work or regarding money?
  • What things do you see as the most important to our family? Why are these things important?
  • How do you define success in life? At work? With money?
  • What activities and hobbies give you the greatest joy or satisfaction?

A professional can also help when disagreements or frayed relationships with adult children may derail the conversation. While every family is unique and we take a customized approach to each situation, we’ve been in the business long enough to have seen just about every scenario.

We’re happy to facilitate having money conversations with your kids. If you are a client, don’t hesitate to call us if we can help get the dialogue started.

If you are not a client, click here to book a meeting with one of our expert financial advisors to discuss how we can help!

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