7 Tips for Raising Wealthy Kids to Be Socially Responsible

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Raising children can be a challenge in itself—let alone raising children that are fiscally and socially responsible. Where do you begin? How do you talk to your children about the wealth they are likely to inherit?

When it comes to successful families with significant wealth, many people don’t know how to talk to their children about money. Between estate planning, taxes and legal issues, it’s tough to separate emotions and finances. But by initiating conversations early on, you can reduce stress and prepare your kids for success in the future.

In this article, we cover seven tips for talking to your children about money (and the responsibility that comes with it).

1) Start Talking About Money from a Young Age

While it may seem too soon to talk to your kids about finances, avoiding the subject can actually make them less prepared for being financially responsible.

"In the name of not wanting their children to develop a sense of entitlement, parents don't speak about money," says Dr. Richard Orlando, founder and CEO of Legacy Capitals. "As a result, the rising generation won't be ready to successfully handle their eventual inheritance. They'll have a sudden-wealth experience, similar to a lottery winner."

By starting to talk with your children about money from an early age, you can introduce these important topics over time. Even a piggy bank sectioned into fun spending, short-term goals and long-term goals can be an effective way to teach financial basics. Allowances are also a great way to introduce budgeting, regardless of how much wealth your family may have.

2) Teach the Basics

Aside from initiating conversation, it’s just as important to start teaching the basics. By generally explaining how you manage your monthly budget, food necessities, insurance, and other ongoing expenses, your children can gain an appreciation for being fiscally responsible.

In addition to your own family conversations, your financial planner, accountant, lawyer or other financial experts may offer additional direction and guidance, too.

3) Encourage Volunteering

Volunteering is important for your child's financial and overall well-being for two reasons: not only can they learn the importance of charity for others, but they can gain an appreciation for what they have.

While it may be helpful to have your kids volunteer for a day at a soup kitchen or a library, doing this over a longer period of time can leave more of an impact. Whether it’s working with an organization they care about, searching for local causes they can join, or being mentors to younger children, they can start being involved in their community and develop a meaningful connection.

4) Require Work for Money Given

When you’re a child, “work” doesn’t necessarily mean employment. It can be doing chores, helping out, or earning good grades. Whatever it may be, requiring your children to put in this effort can help them value money.

"It is important that children develop a strong work ethic," says Dr. Orlando. "But many parents pay for all their child's needs and wants — well into their 20s and sometimes into their 30s. They then wonder why their children don't have a job or stick with a job, especially when the job causes inconvenience in their lives."

By implementing a system for your kids at a young age, you can properly teach the value of hard work while rewarding them for their efforts.

5) Take Your Children to Investment Meetings

Because you want your children to take over their own finances at some point, it’s important for your kids to see the process of how you handle your own. What better way to do this than by letting them sit by your side in a financial planning meeting?

By doing so, you can encourage your kids to ask questions about your investments and push them to start thinking about their own. This will also help you discuss upcoming events like college and how much of their education is their own responsibility.

It’s also effective to have your children discuss with your financial planner how your income helps directly pay for expenses such as housing, utilities, and car insurance.

6) Give Older Children Jobs Within Your Company

If you would like your teenage children to one day take over your company, consider how much experience they’ve had so far—and how you can help them learn even more. By giving them an opportunity at your company (even at positions in data entry or mailrooms), they can gain the experience and positive qualities they’ll eventually need for the workforce.

Mentorship programs or shadow times are also great ways for children to see how others perform their roles and execute their work.

7) Write Clear Estate Plans

Instead of having your children assume all assets will be passed down to them no matter what, it can be beneficial to put conditions on those terms.

For example: you could write into your estate plan that before your child can take over your business or inherit money from your estate, they have to work for your company for three years and graduate college. This could be an effective way to motivate your kids while still providing for them in the future.

This article was helpful.