Talking about money with your children can be a difficult task for many parents. However, while such discussions may be uncomfortable, this taboo mentality can cause problems when it comes to transferring wealth from one generation to the next. Indeed, the only real way to ensure children are ready to take on financial responsibility is through education and communication.
Start the conversation early
Experts commonly suggest the key to preparing children to inherit wealth is to start talking about money early in their lives. Quite simply, the argument is that children who are taught basic money management skills at a young age typically display a more mature attitude to finances in adulthood.
Instil the value of money
Clearly, the type of topics discussed need to be age appropriate. So, for instance, the process may begin with simple money lessons focusing on pocket money when children are young. Giving them some financial independence, whether through an allowance or by making them earn spending money, can also instil financial responsibility and ensure children appreciate the value of money.
Broadening the scope
A range of financial topics can beintroduced as your children move through the stages of adulthood. For example, whilst at university, emphasis may shift to applying financial concepts such as budgeting, before moving to issues such as investing, pensions and taxation when they start work. Other topics could include charitable-giving options, as well as concepts such as mortgages, trusts and wills, and the importance of professional financial advice.
Preparing for financial leadership
The final phase will include discussions about the wealth-transfer process itself and future plans relating to how family assets are to be divided. And, hopefully, by this stage, your children will not only have learnt how to handle money but also understand the importance of family traditions and values.