Oscar Wilde is famously credited for the phrase, “A cynic is a man who knows the price of everything but the value of nothing.” While the-ultra-wealthy are generally clear on both price and value, money cannot buy everything—particularly if it’s squandered by heirs who have no idea what it means to keep it. Families who maintain multi-generational wealth do so by communicating with heirs in a straightforward manner. The rules for this are simple but not necessarily easy. These tips can be implemented by anyone wants to pave the way for a successful conversation about wealth with their children provided they are fully heeded.
1) Know thyself, know thy partner. Have you and your partner taken the time to discuss your money values? Successful families have clear thoughts and ideas about their money and financial affairs including: what it can buy, how it can grow, what its purpose is and how it should be spent, saved, and invested.
Developing rigorous honesty around how money is handled is an essential step in creating a meaningful dialogue with your partner and, eventually, with the rest of your family. Parents, no matter how much or how little they have, typically want their children to be successful and develop a healthy relationship to wealth. Kids are always the first to notice if there’s a gap between what their parents say and what they do. Expressing, “money can’t buy happiness,” while spending lavishly or frivolously creates a pattern and children will model that behavior. However, if words and deeds are driven by what is meaningful, children will see the values of behaviors aligned with attitudes and words.
A disconnect can do a lifetime of damage, undermine moral authority and permanently damage a parent’s credibility. However, if before speaking to kids about money both parents’ beliefs are in concert, there’s a higher likelihood of managing the conversation successfully. These conversations aren’t easy but they’re necessary.
2) Silence around money is far from golden. Money always talks – even when you don’t. Marvin H. McIntyre wrote, “Money is the last taboo. People will talk about their sex lives before they discuss their finances.” The very idea of discussing money openly for many is a cause for extreme discomfort or even anxiety. When families only discuss it on a need-to-know basis, if at all, this is a recipe for failure. Sure, there are wealthy families who are convinced that keeping kids in the dark about the family’s actual net worth somehow preserves their ambition and drive. However, if an heir thinks, someday this all will be mine when the game plan is to gift the lion’s share of the fortune to charitable causes—that kid is in for a rude awakening.
Conversely, if a child believes his or her family is middle class because the parents live modestly and well below their means, a sudden windfall, with no prior training on how to manage it, can be equally as disastrous. This “sudden” wealth can feel like a betrayal when the heir’s life is no longer in step with his or her friends and peers. The key to balance is in opening the dialogue early and offering practical steps to children, depending on their ages, related to responsibility around money. Keeping the conversational door open is not only sensible, it creates a perspective on what wealth means and what it can and cannot do.
Also, given the range of information available on social media, anyone from total strangers to your children’s peers can find a variety of personal data if it is listed, such as the list price of your home. Children may, as Oscar Wilde suggests, “know the price of everything.” It’s up to those raising them to teach as well as live values.
3) Teach children the difference between privacy and secrecy. On occasion parents hesitate to discuss money with younger children out of concern that they’ll make inappropriate comments about family wealth to others. But a conversation about what is appropriate to share—as well as what’s appropriate to discuss openly but within the family is helpful, particularly for very young children. If they’re simply told, “This isn’t something we talk about,” children internalize that. They’re likely to feel as if talking about family wealth — or wealth itself — is shameful. The distinction between privacy and secrecy can be understood by youngsters if it is explained well.
It’s wise, as well as appropriate, to emphasize that conversations about family wealth are family matters—which are discussed only among certain people, who may be mentioned, by name, to clarify. If a child infers any need for secrecy about these matters, it may lead to unhealthy attitudes about both wealth and control. Such messages when carried into adulthood are not easily undone.
This article was written by Brian Luster and Steven Abernathy from Forbes and was legally licensed through the NewsCred publisher network.
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