According to a recent study by Ameriprise Financial, eight out of 10 people say passing on their financial values to the next generation of their family is important to them.* It’s for a good reason. Financial wisdom is a gift that can have lifetime rewards and last longer than a monetary gift. If you’re looking to pass on financial values to your kids, here are nine ways to get started.
- Teach financial awareness. Expose your kids to real life money management scenarios early on. Let them know that bills need to be paid monthly. Explain why you are saving for unexpected expenses as well as larger purchases. It may surprise them to learn that it costs money to borrow money. Unravel the mystery of how money changes hands and why it’s important to be careful with it. Instill confidence that they can be good earners and use their earnings productively.
- Provide guards. Give your child the opportunity to learn boundaries, even if your own resources are abundant. Help them identify the difference between what they want and what they need.
- Help them save. Encourage your children to save at least some of what they earn in the form of allowances, household chores, or a part-time job. Show them how small steps can go a long way. Like any habit, saving takes practice before it becomes second nature.
- Show as much as you say. Your children watch where you invest your time and money. Make sure your actions match the messages you want your children to receive.
- Involve children in charitable causes. Children learn valuable lessons by helping others less fortunate. Allow them to choose a charity to support. Volunteer and fundraise together. Encourage them to set aside some of their own money that they can donate to causes they care about.
- Promotes balance. Help children see that money is a means to an end, rather than an end in itself. Convey the need to make money, but not at the expense of anything important.
- Prepare them for inheritance. According to the Ameriprise survey, only 19% of parents who intend to leave an inheritance are willing to share financial details with their heirs.* Yet keeping heirs in the dark can lead to confusion and misunderstandings. An estate plan is an excellent example of financial discipline and generosity. Adult children can benefit from knowing the strategies you use to preserve and grow generational wealth. They may need guidance on what happens when money is transferred, including how to set up a legacy account and how to manage and grow a financial windfall.
- Continue the conversation. Money talks don’t have to be one-sided conferences. Let your children ask questions. Ask them what their own financial goals and dreams are. Be a resource as they grow.
- Refer them to the experts. Expose them to books, podcasts, and people who can teach them how to be financially savvy. When they are adults, introduce them to your financial advisor. With insight into financial planning in action, they will be better able to apply these principles to managing their own finances.
*Ameriprise Money and family study (2022)
Thomas A. Callaway CRPC®, is a financial advisor at Ameriprise Financial Services, Inc. in Paris TX. He specializes in fee-based financial planning and asset management strategies and has been practicing for 29 years. To contact him you can go to www.ameripriseadvisors.com/thomas.callaway or call (903)785-7000, office located at 2219 Lamar Ave Paris TX 75460.
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