Have you ever met a successful person with poor self esteem? They are on such a difficult road. We all need to feel safe, secure and part of a family, yet that’s not a reality for many. Self-esteem matters. When you know yourself, you know your values and your principles. You stand for something, and that’s something those around you can count on. This is especially true when you have developed disciplined values and principles about family wealth.
It’s incumbent upon parents to raise strong, resilient children to pass the torch to, particularly if there is much responsibility in their futures. That great responsibility can include the care of significant wealth. From a financial point of view, strong families expose their children to scenarios in which knowledge and skills about money management result in confident, responsible decision-making for life.
That’s all very important when it comes to family wealth management. It all happens so quickly: children grow up and leave home, parents and siblings die, and for so many boomers—so busy caring for the young and the old alike—the time to counsel their heirs about future responsibilities regarding personal and financial stewardship has somehow slipped away.
Failure to find time for teachable moments is rooted in procrastination for some. That’s because it takes courage to talk about money, particularly if its accumulation has affected relationships. But it’s important to get those conversations on track.
When are you going to talk to your children about the insurance policies, residences and financial assets they will inherit? Do your children view money as a resource tool to help them maximize their potential? Do they have any skills to manage it? For example, do your adult children know:
- How to read their tax return
- How to construct a personal net worth statement
- Principles to save by (should that be 10%, 18% or 25% of income?)
- Principles to borrow by (paying off the credit card minimum every month is not such a sound financial plan!)
- How to preserve income and capital from taxes, inflation and fees
Have you introduced those adult children to your professional advisory team for help with taxes, financial and wealth planning? They could very well be on the road to exceeding the income you have made in your lifetime—especially if they are better educated than you are. They could also be quite shocked to know that they will inherit a lot of money from you.
It’s Your Money. Your Life. Financial education is a life skill that builds self esteem. Are you talking to your adult children about their money and the wealth you will pass down to them? Would your child consider it a devastating breach of trust if this were a surprise later? That’s risky, if your goal is a strong family with strong self-esteem. Taking the time to guide young people pays off in building and sustaining strong financial dynasties. Are you reaching out to help them? Would your child consider it a devastating breach of trust if this were a surprise later? That’s risky, if your goal is a strong family with strong self-esteem.
Evelyn Jacks is President of the national financial education institute, Knowledge Bureau and best-selling author of 46 books on tax preparation, planning and wealth management, including Master Your Taxes. She was a member of the Federal Task Force on Financial Literacy.