Family business-owning parents often struggle having “The Talk” with their children.
What is the correct age to have The Talk? How much should we tell them? What if they ask questions we’re not comfortable with?
Of course, the talk I am referring to is the family money talk, and for many it is as uncomfortable as the other talk. Why is that? Many parents worry that if children, or young adults know that the family has money, or that they will have any type of inheritance, they will have a sense of entitlement, lose motivation for getting an education, or encourage a wasteful, materialistic lifestyle.
Unfortunately, not talking about money at all, or only talking about money and neglecting the emotional and non-tangible aspects of having money, contributes to misunderstandings and a lack of preparedness to handle the future inheritance.
How children of any age think and feel about money is the result of many subtle and not so subtle clues from their parents or grandparents’ own attitudes, and it trickles down from generation to generation.
A financial discussion is most successful and valuable when it includes more than just dollar amounts and bank accounts. It should include things like the family’s values, mission, goals, and traditions. In addition, personal development, community service, and ideas around philanthropy should also be shared.
Lessons in saving, budgeting, and sharing money can begin at a young age in very basic terms. From there, it should progress to a deeper level based more on the maturity level of the children rather than a set age. Sharing the business and family financial matters is an important phase in succession planning and assessing the readiness of the company’s future leaders. What’s important is that financial values and ideals should be carefully thought out and planned in advance so they can be taught and nurtured well before they’re needed.
It’s a good idea to include the distribution of personal property, too, such as heirlooms and items of sentimental value. This can be a great opportunity to share the stories behind these items and find out which items mean the most to which child. Parents may learn as much as the children during these conversations.
Family meetings are a good forum for these discussions. Being open and honest with your children and explaining why you’re making the financial decisions that you are can help lessen conflict, soothe hurt feelings, and help avoid legal action down the road.
You wouldn’t willingly hand over the family car keys to your 16-year-old without driving lessons, so ask yourself, why would I hand over their inheritance without providing important financial lessons, or at the very least, having The Talk?