Nancy Graham January 29, 2020 Family Stewardship & Philanthropy Three Reasons to Start Talking About Your Family’s Wealth If you’ve been tracking my “No Dumb Questions” for a while, you may have noticed one of our recurring themes has been to debunk the usual “get rich quick” schemes by building on a larger question: How can you and your family build and maintain financial well-being? Trust me, it’s not through slick trading tactics. Instead, one of the most effective actions I know is to simply remove the usual taboos around talking about money in your family. Let’s Talk About It (Wealth, That Is) When is the last time you had a heart-to-heart money talk with your kids, at a deeper level? If it’s been a while – or if you’ve never done it – you’re not alone. In his excellent book, “The Opposite of Spoiled”, The New York Times columnist and author Ron Lieber gets to the heart of why: “People are not dispassionate about money, and they’re certainly not calm and rational about their kids. This potent mix, then, often makes it incredibly hard for parents to talk openly and honestly with their children about the topic.” Today, let’s cover 3 reasons why we need to bust this taboo wide open. 1. It’s in Your Children’s Best Interest My team member Brady Plunkett recently covered how important it is for parents to play an active role in their kids’ financial literacy. You cannot count on our education system to teach them everything they need to know about spending, saving, borrowing, and investing. Nor do you want them to first learn about it by diving into the financial service industry’s ocean of opportunities, without any swimming lessons. There are just too many sharks out there. To pave the way for your children’s eventual financial independence, the most important thing you can do is start talking to them about money matters early on … on two key fronts. First, you can walk them through practical information and tangible skills, such as how to: Open a bank account Apply for a loan Read the fine print Invest in sensible, low-cost index funds Understand when they are being sold something they don’t need Whether through your coaching or the school of hard knocks, your kids will learn these skills eventually. It will serve them best if they learn how to do it well, right from the beginning. Second, and just as critical, you want to connect these financial practicalities with what really matters in your child’s life: Security, purpose, love, joy, and similar aspirations that money can facilitate, but can never buy outright. How do you proceed? Both practical and sublime teachable moments begin with open, sometimes challenging conversations – preferably held regularly, and not in moments of high stress or emotion. As Lieber reminds us, “[K]ids are intensely curious…. it’s their job to figure out how the world works.” So, starting now, I encourage you to spark their natural curiosity about how money works. Use your household’s real-life challenges and opportunities, to expose them to the real–life world of choices and decisions about resources. This may make you squirm at times, but it’s far more likely to interest them than an abstract exercise that has nothing to do with them. As your children mature, you can increasingly involve them in the decisions you’re making about your household finances. That way, they can learn to appreciate that spending and earning don’t happen in a magic parental bubble, and that the credit card bills need to be paid! 2. It’s in Your Household’s Best Interest Let’s face it, each of us probably has our own hang-ups about money, developed from our own childhoods. And we often put a great deal of pressure on ourselves to provide. If you give your child the space to question your financial choices – and you have the courage to listen – you may find yourself making better choices for all concerned. Sometimes, there’s nothing like the brutal honesty of a child, who has no preconceived notions, to uncover the flaws in our own thinking. 3. It’s in YOUR Best Interest There is one more benefit to having ongoing financial conversations at home from early on. By removing the elephant from the dining room (where most of my family’s money conversations have taken place), you’re creating an environment for a lifelong dialogue among you. In other words, while equipping your children with the financial literacy they’ll need to take care of themselves, you’re also equipping them with skills you may have to rely on later in life. After all, if you become unable to manage your finances, your children may be the ones stepping in for you. In the face of life’s greatest financial challenges, the earlier you’ve established open lines of communication among the generations, the easier it should be to figure things out – together. Isn’t that one of the main reasons you’re trying to build lasting wealth to begin with? Thanks for listening. Now, go have a chat with your family! Share: Facebook Twitter LinkedIn Email CIRO Advisor Report