Nov 13, 2023
How to Engage Your Next Generation in Financial Discussions
Most parents would agree it’s important to raise financially independent children. Yet, it’s not necessarily easy to make that independence a reality. Parents often ask for our help with their “Money Talks”—those vital conversations to demystify the mystery of money and set up their children to make sound financial decisions. If you’re ready to start the discussions or want to advance your existing ones, we hope the following tactics and tools will inspire you.
Start early, start small and build from there. Fundamental concepts like saving, spending and giving can be introduced when your children or grandchildren are young and as their lives evolve (see suggested topics below).
Talk values, not dollars and cents. Are you wondering how much you need to reveal about your own finances? It doesn’t have to be an all-or-nothing approach; strike a balance that’s comfortable for you between discussing how you manage your finances and the values you uphold that inform your money decisions.
It’s okay if you don’t have all the answers. You can find the answers together, with the help of your Corient Wealth Advisor or other trusted professional, as needed. Admitting there are knowledge gaps may help others open up about their own areas where understanding of financial concepts may be lacking.
Build trust through open, respectful dialogues. “Money Talks” involve a series of conversations, not a one-time discussion. Begin by asking for your children’s input: What questions or concerns do they have? What topics are they most interested in? Listen and give them plenty of time and space to talk.
Share your experiences: Discuss real-world examples or your personal experiences that demonstrate the trade-offs of financial decisions. What has worked well? What mistakes have you or others made that your children could learn from? Feel free to show that you’ve faced similar financial challenges (vulnerability, empathy) and have gained valuable knowledge and experience as a result.
Be respectful and non-judgmental. Your children’s interests and priorities most likely do not squarely match yours. For example, their saving and spending decisions, as well as the philanthropic causes they want to support, might not mirror yours. That’s perfectly fine. It’s important to allow them to explore the areas that tug at their heartstrings and are relevant to them.
Know your own financial picture first. How confident are you with your own long-term financial security? Do you know how much you can afford to set aside for family and/or charity and still have more than enough to achieve your goals? Your financial security comes first! Seek assistance from a Corient Wealth Advisor for clarity on your financial situation and goals.
Hold a family meeting. Identify in advance your objectives and guardrails (what you are willing to discuss or not), plus have an agenda and perhaps clearly defined “rules of engagement” on how participants should interact at this meeting. Would a facilitator help? Including your attorney or wealth advisor may make the meeting more comfortable and productive, but that’s at your discretion.
Engage your children in philanthropy directly if this is important to you. Volunteer together in a charitable activity meaningful to your children. Create a charitable account and allow your children to decide which organizations will benefit. Set family giving goals together. Communicate what motivates you to give and why. Your children will learn from your example.
Discuss your estate plan at a basic level when you’re ready. You don’t have to reveal account balances or other highly private details. Instead, focus on what you care about most—your goals, values and overall philosophy. At an appropriate age, share whom you have named in certain roles (executor, trustee), how your assets will pass and why a formal trust is part of your plan. If something were to happen to you, reveal whom you have named to make healthcare decisions (via your Health Care Directive) and to handle your finances (via your Power of Attorney). If you have a long-term care policy, consider letting your adult children know, as it may affect their own financial planning decisions.
Encourage your adult children to create their own estate plan documents, such as a Health Care Directive when they leave for college and a will when they get married.
Allow your children to make financial decisions when the stakes are smaller. Consider giving your children some money today (at an age-appropriate level) to see how they handle it. You may wish to convey your intentions, but let your children make their own decisions and learn from them while you are here to guide them. After all, there may be much more money coming to them later from your estate.
Make a video or write a letter about your wishes for your family. You might convey, for example, your vision for your legacy, the source of your wealth, your hopes for your heirs’ stewardship of assets, and your rationale for charitable giving and the causes you most care about. It may become a valuable and treasured resource for your children (and even grandchildren).
Everyday/informal learning opportunities, especially at key milestones for your children:
- Take advantage of everyday events to chat about money basics: at the cash register in the supermarket, paying a restaurant check/leaving a tip, withdrawing money at the ATM, shopping for clothes, choosing a birthday present for a friend or family member, paying for gas.
- Make a budget together – for a trip, school supplies, decorating a room, buying a car, renting an apartment, etc.
- Review their first paycheck and how they might choose to spend or save the money they’ve earned.
- Review an account statement (theirs or yours) so they’re familiar with the structure and contents.
- Encourage them to save and invest for the future; talk about the “magic” of compound growth.
- Discuss what it means to have debt and how to pay it off. Teach them how a credit card works, the importance of a high credit score, student loans, mortgages, etc.
- Guide them in signing up for employer benefits (e.g., health insurance, 401k contributions, life and disability insurance). Encourage them to seek professional advice and/or contact the HR department.
- Include your children in a general discussion with your Corient Wealth Advisor.
- If your child has a significant other (and perhaps even kids of their own), consider a conversation about protecting assets (yours and/or theirs).
ABOUT THE AUTHOR
Jane Newton, CFP®, MBA
Jane Newton advises individuals and families to help them realize their financial and personal objectives. Drawing on her Wall Street background, Jane has a particular focus on the unique planning and investment needs of women on Wall Street, extending to their career choices and personal goals, helping them make sound, informed decisions with clarity and confidence. In 2010, Jane founded the RegentAtlantic Wall Street Women Forum for high-level women in the industry.
Jane joined RegentAtlantic in 2005, with 17 years of prior experience in J.P. Morgan's investment banking and private banking groups. Jane received a BA from Tufts University in Economics and an MBA in Finance from NYU's Stern School of Business, and holds the CFP certificate. Jane is a member of the Women's Bond Club, 100 Women in Finance, and The New York Community Trust's Women's Advisory Council. Jane serves on RegentAtlantic's Board and the Compensation Committee and leads the Client Retention Committee.
Lauren Waldo, CFP®
Lauren is a Wealth Advisor in our New York City office. Prior to joining legacy firm Inverness Counsel in 2015, Lauren worked with high net worth individuals, trusts and foundations as a senior client associate at Rockefeller & Co., Inc. Her previous roles included manager of service architecture and implementations and relationship manager at Rockit Solutions, LLC, a wholly owned subsidiary of Rockefeller & Co.
Lauren earned a BS in Finance in 2005 from Marist College, where she graduated summa cum laude. Lauren is a CERTIFIED FINANCIAL PLANNER™ professional and an Accredited Fiduciary Investment Manager®, has earned the Certified Trust & Fiduciary Advisor (CTFA) professional certification from the American Bankers Association and is a member of the Financial Planning Association. Lauren has also passed Level I of the CFA program.
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