Do You Talk To Your Kids About Your Money?

Millionaires Hesitate To Disclose Wealth
A US Trust Study “Insights On Wealth and Worth” published in April of this year surveyed 450 Americans with 3 million or more in invest-able assets (not including primary residence).

Among other findings, the group analyzing the results concluded that wealthy parents are ‘hesitant’ to discuss wealth with their children.

However, the numbers they give don’t really support that conclusion in my mind.

The question being responded to was: “To what extent have you disclosed your wealth to your child/children?  Possible responses were No Disclosure, Some Disclosure and Full Disclosure.

Millionaires Do Disclose Wealth!
The numbers say that 85% of the respondents did at least some disclosure. Thirty-three have fully disclosed their wealth. Another fifty-two percent have done some disclosure. Only eighteen percent have done no disclosure at all.

The reasons to not discuss wealth listed in the report were:

• 31% never thought to do it
• 24% think it will make their kids lazy
• 20% think their kids will make bad decisions because they know about it
• 20% think their kids will squander the money if they know about it
• 13% think their kids will be taken advantage of if they know about the money
• 5% think they will marry the wrong person because of the money
• 5% think the kids will squander the money on addictions
• 5% don’t know how to bring up the subject

I’m worried only about that 31% that never thought to do it!

Even if you aren’t a millionaire, there are many reasons to discuss money and wealth with your children.

Why You Should Discuss Money and Your Wealth With Your Kids?

• They won’t learn about money unless you talk about money.
• They won’t be prepared to manage it if they don’t know about it.
• They won’t have a clearly identified sense of their money personality and won’t be able to identify their future spouses money personality. Understanding how you interact with and feel about money is important to future couple harmony.
• They won’t have an opportunity to learn to deal with the emotions of having money.
• They won’t understand what it is that you hoped they would use the money for.
• They will think you didn’t trust them if they find out about it after you die.

If the survey respondents had trained up their kids to talk about and understand money and personal finance they would have more confidence in their kids ability to avoid those negative impacts.

James E. Hughes (author of Family Wealth Keeping It In the Family Family Wealth Keeping It In the Family), suggests that the family must have a compact among generations in order to avoid riches to rags. That compact requires a common understanding of family history, culture mission and legacy. It requires that members of each now generation train the members of the upcoming generation in money management. How can you do that if the kids don’t even know about the money?

Why do you think you should talk to your kids about money?

When Should You Discuss Money and Your Wealth With Your Kids?
Start training them about money while they are growing up. Talk to them about the differences they will inevitably notice between your lifestyle and that of some of their friends – without maybe telling them how much you have. Teach them the skills to handle animosity that having money can bring from some. Teach them personal finance topics so they are prepared to make their own way in the world. Progressively train them in more and more advanced topics as they age.

Full disclosure (including how much money the family has) can come when the family agrees it is the right time. According to Mark Hayes Daniell, author of Strategy for the Wealthy Family, some wait until the heir is between 21 and 30, others begin the discussions when the child is at the end of formal education.

Do you plan to let your kids know how much money you have at some point?

What You Shouldn’t Say About Money

According to Silver Spoon Kids How Successful Parents Raise Responsible Children  the 10 worst things to say to kids about money are:

1. We can’t afford it (when you can).
2. We’ll talk about (buying) it later (if you don’t intend to do so).
3. Pay for grades (book thinks it is bad – that you are teaching the kids to work for goals just for money and not for the self satisfaction of gaining the goal).
4. Money is the root of all evil.
5. Time is money (teaches the kid to place a money value on everything).
6. That’s not an appropriate question (makes the kid feel guilty about being affluent – when the question is are we rich?).
7. They are disgustingly rich (makes the kid think wealth is negative).
8. Don’t let anyone know how wealthy we are (privacy is good, details are bad, but making the kid think the family money is top secret may cause trust issues in the future).
9. Have your friends over because we have a pool (big screen, vacation home, whatever).
10. Be thankful you don’t live there (don’t associate happiness with affluence).

How many of these have you used (I know some of them have come out of my mouth!).

Disclosure:  Family Money Values is a Walmart Associate.  Clicking on the the book links above may reslut in Amazon paying us a small commission on the sale (if you purchase).