How to Talk to Your Children About Money

Rarely do wealthy families only allow sons to inherit in this modern day and age, but what is still commonplace is the children being left in the dark about their parent’s intentions until the reading of a will after their passing.  The question of how to talk to their children about money is the most problematic question for wealthier clients according to financial advisors.

Parents fear letting their children know that they will inherit might make them lazy, unwilling to work, or even drive them down a hedonistic path of drink and drugs. But being left ignorant until they actually do inherit a large amount of money could lead to traveling down that path anyways. Parents mays also worry if the children were born into privilege and had shown a tendency to be frivolous. “They spend the money like water as they don’t see any value in it. As someone who built up money themselves and came from nothing that’s a really challenging situation and there’s an element of regret they didn’t engage earlier.”

Helen Watson, co-head of Rothschild & Co Wealth Management, says that a majority of her clients fear speaking to their children about how much they will inherit because they fear it will stifle their personal ambition and drive for accomplishment for themselves. 

For those that are both willing and ready to talk to their children about their inheritance, there is no right time or age to have the discussion, but advisors usually recommend early adulthood, before a serious relationship is cemented between the child and a sweetheart. Being responsible with money can be introduced much earlier, however, often with the implementation of a piggy bank in the pre-school days.

See Alice Ross, How to Talk to Your Children About Money, Financial Times, December 26, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.