How to talk to young adult children about family wealth
Four ways transparency can create a lifelong planning partnership with your children.
Transparency around "wealth" is a nagging concern for families.
And it's not necessarily tied to the number of zeroes on our balance sheet.
Parents just tend to have a general discomfort and confusion about how and when to talk to their children about wealth.
Recently, I met with a CEO of a public company.
He had an interesting twist on the topic: "I've never talked to my kids about my wealth.
They are in their mid-20s.
I didn't want to ruin their motivation in life.
The catch is that my salary and estimates of my wealth are available online.
They can look it up anytime.
In fact, they probably have.
But I still have no idea how to bring up the topic with them." Parents tend to have a general discomfort and confusion about how and when to talk to their children about wealth.
What this dad is grappling with is easily the number one concern I hear from parents when it comes to talking to their children about wealth.
They repeatedly express a range of emotional resistors like "I don't want to ruin their motivation," "I don't want them to know we are wealthy," "It's my money-they don't need to know about it," and, the biggest resistor of all, "We're not wealthy like other people." In almost every case, our beliefs (and sometimes societal myths) about transparency and the impact wealth might have on children of all ages keep parents like our CEO friend from talking to their kids.
Young adults need ongoing sense-making around wealth The reality is that kids already have a sense of their family's wealth status, whether the information is available online or not.
From a young age, they are aware of and compare their "lifestyle wealth" against their friends: the houses they live in, the cars they drive, the vacations they take, and the jobs their parents or grandparents have.
Then later, they are acutely aware of their options for college, whether they have debt, the size of their wedding, and how much their parents do or do not give them to get started in life.
Helping children make sense of wealth experiences begins with distinguishing between "money" and "wealth." Money is transactional.
It's about spending, trade-offs, and budgeting.
Wealth is a broader concept.
It's about the options and opportunities you have as a family and the values that inform your choices today and into the future.
If we only talk to children about money as a means to "get something," we never connect it to the family's larger realities around wealth.
Helping children make sense of wealth experiences begins with distinguishing between 'money' and 'wealth.' Transparency is about wealth conversations.
We need to stop thinking about it as "should I" or "shouldn't I" talk to my kids.
Instead, think of transparency as "How do I help my kids make sense of their wealth experiences as they age?" I call it "life-moment transparency." When we think of it this way, we can turn life moments with our children into an ongoing co-planning partnership where transparency takes care of itself through time.
Parents can be co-planning partners with their young-adult children A co-planning partnership with young-adult children is a life skill that families don't always develop.
Here are four scenarios, each with conversation hints, that can help you intentionally cultivate life-moment transparency around your family's wealth choices and decisions.
When your "teen" young adult shows financial curiosity A teenager's participation in the family's "lifestyle wealth" creates expectations and establishes patterns of communication around how the family will talk about wealth into the future.
Family scenario: You buy a vacation home using a "gift" from your mother after she sells her business, and your 16-year-old son looks online and finds out how much it cost.
Transparency moment: Invite your son to talk about his grandmother's experience of selling her business and her decisions about generational wealth ...
and share your vision for how the family will use wealth to have fun together, now and into the future.
Conversation hint: Be curious about what your son thinks of the purchase price and the family's wealth.
Ask questions and listen so you can help him make sense of your family receiving the "gift." DO NOT shame or judge his interest or shut him down with an "It's none of your business" approach.
Share your vision for how the family will use wealth to have fun together, now and into the future.
When your "leaving home" young adult is becoming more independent The going-to-college or moving-out time allows for exploration of life choices and sets up access and boundary conversations around money and wealth.
Family scenario: Your daughter is looking at colleges and asks you how much tuition "we" can afford.
She wants to major in music and wonders how much money she will make in the future.
Transparency moment: Explore what "we can afford" means by offering levels of transparency around savings or financial capabilities ...
and discuss the potential financial implications of her career choice and the possibility of future wealth sharing in the family.
Conversation hint: Honor her responsible approach with affirmation and interest in her questions.
Use the moment to do sense-making around what future financial conversations might look like.
DO NOT dismiss the inquiry with a "You don't have to worry" avoidance of life-moment transparency or financial judgment of her career thinking.
Do sense-making around what future financial conversations might look like.
When your "independent" young adult wonders about financial help Early adulthood choices offer a door to talk about how the family will balance a willingness to help kids get started in life with children taking responsibility for their own financial lives.
Family scenario: Your daughter is wrestling with a job offer in her hometown and one in New York City, where she really wants to work but can't afford to live right out of college.
Transparency moment: Learn more about your daughter's career and life interests around living in New York ...
and share if you are willing to help her get started by providing funds for things like rent, living expenses, or travel opportunities.
Conversation hint: Put on a "coach" hat and help her think through the options without financial considerations.
Then put on a "parent" hat and do sense-making by sharing thoughts on helping her get started in life.
DO NOT default to a "It's up to you ...
you're on your own" approach or miss the opportunity for nonfinancial life and career conversations.
When your "new career" or "new relationship" young adult is interested in the future When a child's career and relationship commitments are more established, there is an opportunity for the family to talk about their vision and longer-term interests around their planning and sharing wealth.
Family scenario: Your 28-year-old son remembers you mentioning you would help your kids buy their first house and jokingly reminds you about it, not knowing that his grandmother left him a trust.
Transparency moment: Provide full disclosure of the trust and the generational wealth in your family ...
and open the door for an ongoing conversation about how you will talk through future co-planning and potential wealth transfers.
Conversation hint: Acknowledge that you didn't let him know about the trust.
And then be very open about the generational wealth and the need for future co-planning conversations.
DO NOT go into "parent lecture mode" where you project (onto him or his situation) your fears about money ruining his motivation or living beyond his means.
A wide range of fears and resistors can keep us from talking to our children about wealth.
Just find a way to start talking A wide range of fears and resistors can keep us from talking to our children about wealth.
But when we have "wealth" conversations during meaningful life moments, they become a natural part of growing up together.
Remember that each conversation is a new experience for everyone.
So, approach them with an in-the-moment humility and acknowledgement that you are all working to develop new skills around transparency and co-planning conversations.
Here are a few hints that might be helpful in facilitating life-moment transparency: Be curious.
Ask more questions than you share advice and opinions.
Separate voice and vote.
Seek views without worrying about the decision.
Co-create boundaries.
Build safety by discussing expectations and limits.
Practice conversation skills.
Focus on "how" you talk more than "what" you talk about.
Reprocess bad process.
It won't always go well ...
talk about that, too, without blame.