Being affluent can present its own set of parenting challenges. If your children believe your wealth means they will always be provided for, it may be difficult to instill in them a strong work ethic. On the opposite end of the spectrum, they may need a well-informed and balanced perspective on how their financial advantages may influence their ability to contribute to the world.
Here are some tips from two family dynamics specialists at Wells Fargo Private Bank that may help affluent parents teach kids about money and instill in them a healthy financial attitude.
Examine your own perceptions
Before you can teach kids about money and wealth, you have to understand your own attitudes. "You are modeling daily how you feel about wealth even before you start to speak to your children about it," explains Natalie McVeigh, Family Dynamics Consultant at The Private Bank. How you talk about money with your spouse; how you treat others based on their job, role, or (perceived) financial status; and how you invest your time and energy all shape kids' financial attitudes — as well as their perceptions of how to treat people who have a different wealth profile. Examine how your own financial beliefs and situation inform your behavior to ensure that the nonverbal and verbal financial lessons you send to your kids are what you intend.
Use the idea of spending to talk about how to prioritize wants over needs; the concept of saving to discuss the value of delayed gratification, setting goals, and working toward them; and giving to discuss how wealth can be used to support causes a child feels are meaningful.
"When you know how you feel about wealth and how you are going to act out your values about it, that's the starting point for the wealth conversation with your children. In fact, we have a tool called a wealth genogram (or family diagram) that may help with your identification of wealth models," says McVeigh.
Suzanne Mansell, also a Family Dynamics Consultant at The Private Bank, suggests parents ask themselves these questions to identify the family financial attitudes they want their children to embrace:
- What values do we want to pass along to our kids?
- What do we think "rich" really means?
- How does having financial means relate to our values?
Broaden financial attitudes
As kids grow and become increasingly exposed to the different ways people live, they may become curious about your family's lifestyle and start asking questions about what it means for them. McVeigh suggests affluent parents embrace these moments to discuss the merit and values of your family's history and how it connects with financial wealth. "When we tell children stories about how grandma or dad built the family business (or went to their office every day), we highlight their skills and service to the community and family, and it introduces children to a more broad definition of wealth — including human, intellectual, and societal capital," says McVeigh.
Mansell adds this is also a time to communicate that the notion of wealth isn't limited to financial resources; it includes loving relationships as well as aspects of well-being, such as time, physical, mental, emotional, and spiritual health. "Ask children, 'In what ways do you feel wealthy?' It's a great opportunity to hear their response and an opportunity for a teaching moment," she says.
Put your lessons into practice
The common practice of using jars or envelopes labeled "spend," "save," and "give" can teach kids about money management — but McVeigh says the concept can also help affluent parents use tangible examples to help guide their children to form a healthy perspective about wealth. For example, parents might use the idea of spending to talk about how to prioritize wants over needs; the concept of saving to discuss the value of delayed gratification, setting goals, and working toward them; and giving to discuss how wealth can be used to support causes a child feels are meaningful.
In this way, you can think of wealth as a "magnifier" for the ideals and goals you already have and want to pass on to your children. Spending, saving, and giving can all help to create good in the world based on your personal value system.
Affluent parents should help kids develop a work ethic and confidence in their abilities and talents, but McVeigh says it's important not to become hyper-focused on it. "Wealth can become a burden or a source of shame as easily as it becomes a reason for entitlement," says McVeigh. Teach your kids not to flaunt their wealth, but at the same time to not be ashamed of it or the opportunities it provides. Commit to having an open dialogue with kids about their aspirations and honest conversations about how the family's wealth may help them achieve their goals. This can help ensure that your children don't grow into adults who feel anxious about their financial advantage or unqualified to make decisions about wealth they haven't earned.