Practice. Consistency. Planning.
Financial Education is a Multi-Generational Process
In our last month’s column, Optimizing Your Estate Planning, we discussed the ‘how’s & why’s’ of how you can impart valuable, lifelong lessons and financial legacies for your loved ones – specifically your children.
As with most skills, talents, and overall ‘education’ gained throughout a lifetime of experiences, remember – practice makes perfect, and consistency is key. We suggest that when imparting knowledge of finances; from saving change in a piggy bank for the youngsters, to teenagers saving percentages of allowances, monetary gifts, etc., – and working with them as in a mentor role, as they start their very own bank accounts.
In this article, we take ‘Optimizing Your Estate Planning’ a leap forward with tools, techniques, tips and take-aways. Financial wealth expert and consultant, Joline Godfrey sheds a thoughtful, practical and actionable light in this article.
PRACTICE Makes Perfect
Every year or every quarter there are activities, plans, messages, everything needed to be accomplished in a very repetitive way over a period of time, that helps ground children in the basics of financial literacy ~ appropriate to their family wealth factors and long-term responsibilities – such as philanthropic commitments. “I know I’m not working with a thought-leader family when I get a request to come out for an afternoon to work with their kids,” says Godfrey. “This is a process, it’s not an event. One afternoon is not going to have the kind of results one would expect from that kind of half-hearted attempt.”
Children who will inherit significant wealth and the responsibilities that go along with it, require world-class preparation. Balancing a checkbook and understanding compound interest is one thing, but managing assets, establishing a growth-minded foundation, and teaching a child to have vision ~ is another. Mom may have built up a very successful regional chain of restaurants, but her twelve-year-old son and ten-year-old daughter may someday need to sit on the board and also approve the management of investments that support an extended family.
One way to engage children is to play off of their passions; otherwise, financial education will feel like classroom instruction. There are “family wealth counselors” who work with families to identify the things their children already have an interest in, and are willing to spend time pursuing such as a favorite sport or activit. From this identification, these cousnselors develop a learning program around the child’s interest or passions as a theme.
Another approach to spark a kids interest in financial matters is by using special group events. This month for example, Godfrey is running a mother-daughter weekend called “Fashion and Finance” in New York. The idea is to get young women to truly engage in their own financial development. One of the sessions will examine the connections between “Women’s Wear Daily” and the Wall Street Journal.
The end goal is to help each family member of the next generation to have an individual ‘economic vision statement,’ and to have developed the skills required to realize their unique vision and plan – tangibly.. While many families want their children to understand the basic concepts and terms, their children need to go beyond the introductory levelof money management to incorporate family values, such as those related to charitable giving or volunteering, as well as their particular interests in participating. Their ‘economic vision statements’ themselves will evolve as these children mature and become more focused in their individual interest and goals.
CNSISTENCY is Key
“Every time I hear another horror story about a kid gone wild, I think, ah, family gone wild,” observes Godfrey. “The family is not really providing the kind of direction, environment, activities, and learning that the children need. Every family takes for granted that if a child is going to be a proficient at tennis or the clarinet, they need regular lessons, a great teacher, and practice. It’s that same thing for financial education. And so, those kids who get practice, great instruction, and lessons do better.”
By incorporating the “passions” and interests of your children – at any age – Godfrey, for example, insists that she works with all generations of the family. “Those parents who hope a financial education specialist can take their kids and tutor them may have good intentions, but they’re not taking necessary actions to address the challenge. Parents and children must be involved.” She adds, “To do it otherwise is just a waste of time and money, not every family has the appetite to take on this work. It’s costly. It takes a fair investment of time. And it certainly requires all family members to begin to look at their actions in a different way. In general, there’s certainly interest in financial education, but I think a lot of it is just trivial unless there’s an ongoing commitment to the process. The commitment needs to be at least as powerful as the commitment to building a great tennis player.”
PLANNING
Financial literacy for children of affluent families in particular, starts early – just as models of nonproductive behavior do. While parents may have good intentions for raising money-mature kids, they often fail to succeed because they don’t move from ’soft’ intentions to a realized program of financial education tailored to the age and interests of their children. “The kids who do well have parents who’ve gone from good intentions ~ to being intentional,” observes Joline Godfrey (consultant to affluent families on financial education and the head of Independent Means, Santa Barbara, California).
“Every parent has the good intention for their children to grow up financially intelligent, but few of them really act on it. Those thought-leader families who are committed and intentional – and actually provide a family wealth counselor [of some sort or kind] can help ensure the orderly transition of financial planning from parent to child.”
Take-Aways & Tips:
~ The prime age for learning and building good, solid money skills is between 6 and 14. ~ Planning
~ The preparation of the next generation for their responsibilities of building and managing wealth, should be viewed, and planned as an ongoing ‘program.’ ~ Consistency’
~ Practice truly does, make perfect. ~ Practice
Mary Elizabeth Beary
Professional Writer, Public Relations & Creative Communications Specialist
Beary, Ink.
http://www.bearyink.vpweb.com/
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