FEATURE:
Make ‘the talk’ about money with your Kids
In our practice, one of the more challenging aspects of family planning is settlors of a trust not trusting their children to manage his or her own money, let alone significant funds tied up in trusts after the settlors have died. There is a reluctance to involve children in decisionmaking aspects of family structures mainly due to trust issues the parents have with their children, and sometimes spouses of the children. These are genuine concerns, and we continue to work with clients in this area to help smooth the transition. The last thing anyone wants is the next generation to have no idea about money and then for the substantial assets built up over time to be wasted. So, what can be done? There are a few things that can be considered as standalone techniques or combining several different techniques, and I am not talking about having an Agee jar on the kitchen windowsill to encourage saving. This might work for a five-year-old, but not someone in their mid-20’s. However, it is essential to ensure the ages of children are considered in any strategy as it believed that a lot of money habits formed by children are entrenched by the time they are 7 years old. Regardless of
what age children are, we have found that allowing children into a decision-making process is very important for their financial education, otherwise they are disengaged and lack the skills to manage theirs and potentially the family money later in life..
Some techniques to consider: 1. For those who have children who are teenagers, it is essential that they learn about budgeting at this age. This can be achieved through bank account and allowance control and using a budget spreadsheet to keep within. It is important to discuss wants versus needs at this stage. Another option is incorporating children into family budget discussions. 2. For those children who show an interest in investments at this age, playing a game to invest in stocks or other investments and then track performance over a period is helpful. 3. Teaching a child about philanthropy is becoming more and more necessary. The concept of giving, either through donations of money or time through volunteering for charities, is becoming a priority in today’s modern society. 4. For those with older children who have either left home or are increasingly independent to ensure they learn about family businesses or investments, they can be added as advisors to boards to sit in on meetings and learn about the family financial holdings. Eventually, this may lead to proper directorships or trusteeships.
4 l Covisor y Conn ec t Ma gazin e
