I recently spoke to a group of wealth-creating parents with children of various ages. The workshop highlighted the opportunities to develop character, work ethic, a sense of responsibility and a stewardship mindset when kids are under 5 years old. Since many parents in attendance had been unaware of these early opportunities and how to harness them, many were starting later.
Of course, beginning to instill these values with pre-teens or teens is still wonderful.
When is the best time to plant a tree? 20 years ago.
When is the next best time? Today!
Consistently in my work with UHHNW families, one of the top fears is that kids of wealth creators will not have the drive, work-ethic and hunger that played such a crucial role in the parents’ business/financial success. Not knowing the best way to approach this, some parents choose secrecy around wealth, which has the downside of missed opportunities to educate and prepare kids for the financial reality coming their way. In fact, there are many opportunities to prepare kids in developmentally appropriate ways, step-by-step as it makes sense based on kids’ abilities.
Other parents, who struggle just as much with these dynamics and choices as the secretive parents, look for ways to proactively manage the complexity of family wealth and the rising generation with more openness.
One single father shared his thinking in front of about 50 parents at my workshop—commendable and brave! He told us about wanting to avoid having his 12- and 16-year-old sons fear losing out financially and thus act out of obligation to spend time with him, do certain things, or make certain life choices. His idea was to give them a “small nest egg” of money now, to prevent this dynamic. The father asked my thoughts on this.
The first thing that came to mind (and out my mouth) was, “Wow! This is an impressive example of parental sensitivity and emotional intelligence.” Parents exist who, knowingly or unknowingly, use money to manipulate their children to behave certain ways or to prove their love or appreciation, often with dire consequences for family harmony and financial success. (That topic, and myriad examples, is for another blog post). It is rare, in my experience, for a parent to think of gifting, and this young, for the purpose of taking complicated money dynamics OUT of the parent-child relationship. Interesting!
After commending this dad for his bravery in speaking up in a group setting and for prioritizing love and healthy relationships, I did have a significant thought to share. While I appreciated his attempt to avoid even the misunderstanding by his kids that money might be used to demand relationship choices, he was still using a “money-first” approach to these relationships. He believed if he handled money in a certain way, a relationship result would follow.
He agreed with my conceptualization and was caught a bit by surprise that, while he was leading with his heart, his approach led with money and missed communication. He had described his sons as emotionally mature and gave some great examples. With that context, I suggested he talk with his boys about the wonderful financial success he has had, as well as all the wonderful non-financial successes, and discuss how money can complicate life in all kinds of ways. I suggested he describe some of these complications (I gave him a quick overview of a few) and let his kids know that he’d like to work hard with them to avoid the complications in their lives to the extent possible. I stressed expressing his love for them, and the importance of having close, meaningful relationships across their lives. I’m awaiting an update to hear how this went.
Media today is replete with examples of wealthy parents using money and power to manipulate and control their kids. I tend not to watch these as they magnify the worst of what generational wealth can be. Unfortunately, the intentional instilling of values, character, work-ethic, respect and healthy, loving communication does not appear to get ratings and be profitable in the world of entertainment!
However, there are parents who have accumulated significant financial resources and are working with intention to approach parenting with a sense of openness and are raising wonderful kids with character, values and work-ethic. The result of this parenting mindset extends not only through generations, but also outward to positively impact people and communities who have much less and make the world a better place.
I frequently spend time with these proactive and intentional client families who fully buy into the stewardship mindset, often starting when kids are quite young. The overwhelming majority of them use some of the family money, often a great deal of it, to help those struggling get ahead, fund research to cure diseases, positively impact the environment and so much more. These families put relationships and values first and then use money to serve those high ideals and improve the world.