William Blair Hosts Talk on Helping Kids Get Smart About Money

Tuesday, September 25, 2018

Parents are their child's most influential teachers about money.

Teaching your children about money is one of the most difficult topics for parents but it's well worth the time and energy so they can "become experts in budgeting finances," CEO of Money Savvy Generation Susan Beacham told William Blair clients at a recent private wealth gathering in Chicago.

Parents often worry about making a mistake in talking about family finances, concerned they'll say too much, she says. They also tend to put off the conversation with the idea of protecting their children from learning about the family's wealth. But they should avoid these mistakes.

"If you don't teach your children about money, someone else will – most likely an experienced marketer," Beacham says. "Parents are their child's most influential teachers about money."

A syndicated columnist, author and entrepreneur, Beacham founded Money Savvy Generation in 1999 after almost two decades working in banking and financial services in order to help parents and educators teach basic personal finance skills to young people.

A conditional allowance

A great way to start a child's financial education is by introducing a conditional allowance – in the form of a written-out agreement discussed and signed by both the parent and child, Beacham says. Most kids are ready for a conditional allowance at age 8, she says.

The amount is equivalent to the expenses they will cover. The child agrees to pay certain expenses – music, clothes, apps, for instance – and the parent agrees to pay the allowance on a set date. Other conditions can be added into the agreement, such as tracking receipts and agreeing to save, spend, donate or invest.

Beacham says the arrangement avoids the pitfalls of handing over too little money and responsibility and tying the allowance to household chores rather than money management. She also recommends beginning with the oldest child so the younger siblings learn from the elder.

"A conditional allowance is the gateway to budgeting," Beacham says. "It's their very first opportunity to make choices, budget and live within their means."

Family money values

A conditional allowance also sets up an easy structure to teach children accountability and talk to them about family values in the context of money.

Beacham shared examples of such values: not spending to show-off; demonstrating gratitude; saving for experiences and education, not things; introducing credit as a convenience, not an ongoing loan.

On preparing the next generation for their inheritance, Beacham emphasized the value of talking about family history and sharing family stories. She described counseling some children over the years who were so challenged by a large inheritance that they spent years searching for meaningful answers for themselves on what do with the money.

Beacham recommends telling family stories on how the wealth was accumulated and also involve grandparents, aunts and uncles in the discussions.

"You want to create ownership in the inheritance," she says. "The more they know the family legacy, the more inclined they'll be to protect it."

About William Blair private wealth

William Blair's private wealth events provide a forum for investors to explore a variety of wealth management topics, including estate and wealth planning, inspiring the next generation of philanthropists, investment strategies. To learn more about William Blair's private wealth management services, contact pwm@williamblair.com

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