Talking with children about money can be a complex matter, no matter how old they are. Yet, for those families with wealth, the questions around money and finances are particularly important to properly and age-appropriately discuss these matters in order to teach and instill smart decision-making habits. Below are ten strategies for talking with children about wealth.

1. Start Young and Discuss Regularly
Lessons about prudent financial decisions can start at an early age and persist through young adulthood. Talking about responsibility, autonomy and delayed gratification sets children up for smart decisions throughout their lives.

In elementary schools, allowances and being responsible for spending and saving allow children to make good choices that, in small doses, build good habits.

In middle school and high school, questions often begin about “How expensive is this vacation?” or “Are we rich?” It’s important that as children grow older, more information and perspective can be shared. Remember, too, that today’s children are being raised in an increasingly cashless society. Money is increasingly virtual. That’s why tangible practices, such as lemonade stands or cash donations, can be important to understand what money means and its value.

2. Learn When Not to Answer or Share Too Much
You do not need to answer every question asked. It’s a good idea to set your limits about what to answer, how, and where. These limits can help you when the questions become more complex and the answers more nuanced.

Think about what you want to share at the moment versus what you may share later … or much later. These guideposts are particularly important when children start asking questions such as, “How much money do you make?” “How much money do we have in the bank?” or “How much money do my grandparents have?”

Even teens and college students do not have enough life experience, perspective, or context to adequately absorb, understand and contextualize these potential answers.

One approach: Ask why they are asking the question. There may be context – kids were talking about it at school, a friend moved into a bigger house, a classmate’s parent lost their job – that can help you frame your answers appropriately.

Note: It is OK to tell older children that you will answer their questions later but that you are working through a process for how to handle those inquiries.

3. Be Transparent
Being transparent is particularly important for parents whose finances – salaries, stock shares, and bonuses – are accessible in public documents. If you do not share this information, an internet-savvy child may be able to find this information elsewhere, without the context you want to provide.

Consider, for example, that Zillow allows any child to find out the value you paid for your home. If you have just sold a business and the sale is a newsworthy item, your kids may hear about it at school. If your children ask you a question and they can find the answer elsewhere, it’s good to be straightforward and answer it for them.

4. Be OK with Hard Questions
Some of the questions you get may make you uncomfortable. But remember that your children are likely asking out of a mix of confusion and curiosity. Again, asking for context when your child asks a difficult question can help you decide on a response. A difficult question can be a great starter for a conversation that illustrates what they’re thinking about.

5. It’s OK to Fail
“Can I have that toy?? Please!!” It’s a phrase every parent has heard about some shiny object their kid just saw. Addressing impulse purchases and responsibility are important lessons to learn and sometimes kids need to “fail” to learn those important financial lessons.

Letting young children “manage” small amounts of money, such as their allowance, helps to teach good money management skills. They can be shown what happens when they make the wrong decisions, like spending money on that cheap toy and not having money for something they really want. The lesson may involve some tears but will bode well in the long run.

6. Let Them Work for It
There is tremendous value in learning the importance of work. Only having access to wealth created by others does not help create a sense of accomplishment. It can lower a child’s sense of meaning by depriving them of the chance for success.

Reducing parental involvement at the appropriate age and having children be responsible for their bills, expenses, and purchases is an important lesson. It helps children understand the value of earning it on their own. The summer job at minimum wage means more than another vacation.

7. Why You Give Matters More Than How Much
Each family has values that govern how they live, work, interact with others and view the world. These values should frame how much you decide to give your children. As you explain these decisions to your children, frame the conversation around your family values. Those values should be at the heart of how you handle your wealth, both in the present and how you plan to distribute it later.

8. Walk the Walk, Talk the Talk
What are your top 3 values? Have you lived those values over the past week or month? If spending time with family is important, did you make the time to do so?

Your children can hear about your approach to money and finances, but your words may come across as hollow if they do not see you espousing that same approach. Children will observe how you behave and mimic that behavior.

9. It’s Never Too Late
It’s not too late to start these conversations, even with adult children. Even if your older teen or adult children have made poor financial decisions (who hasn’t?), you can still help with a course correction. Frame the conversation around values and how they shape your financial planning.

10. Listen
Conversations with your children need to be just that – dialogues where all parties can talk and be heard. Respect your child’s perspective, feelings, fears, expectations, and questions. They can form the basis for a healthy, honest lifelong engagement around finances.

At Legacy Trust, we help families of wealth navigate these tough waters of raising their kids with wealth and can provide financial resources, educational sessions, and mediate conversations navigating the challenges growing up into wealth can bring. If you have questions or need assistance with your family, please contact us. We’d be happy to help.