Building Strong Families - It’s What We Do!

It is tough enough for many people to talk to their partners about money, but for future generations who will inherit it, money, values, and expertise are just as important to communicate and pass on those lessons down to the next generation.

“It is estimated that 70 percent of wealthy families will lose their wealth by the second generation and 90 percent will lose it by the third.”1

Creating a lasting legacy requires communication among members of the family unit. We typically think about our estate plan as a way to best carry out your wishes. But our legacy is not only for the moment we have checked out from this earth. Our legacy is now.

Money matters are very emotional. Honesty is key to building a trusted relationship. Those who support one another and share a bit of vulnerability will benefit from healthier financial communications and make your family relationships stronger for it.

And it is important to share your fears about money. Past experiences can introduce vulnerabilities so be open to listening to the stories that shaped your partner’s perspectives on spending and saving habits. Acknowledging and listening to what shaped their experience will allow you to better understand each other’s values and the “why” in their decisions.

It is never too late to start, but the earlier you can establish positive messaging, healthy behaviors, and habits in communication the easier it will be to successfully navigate financial decisions together as a couple or family unit. For children, developing a healthy money mindset will carry with them into their adult lives.

What is Your Legacy?

Legacy can be defined as passing down family values, leaving an inheritance, philanthropic impact, or support of your community. Your legacy will differ simply because of who and what is most significant to you. How you leave your legacy—whether you devote your time, share your talent, or give through monetary means—can affect change in the world around you.

Call a Family Meeting
A family meeting is a tremendous way to communicate expectations and knowledge. It is not to say that you must tell your children how much they are set to inherit or discuss how much is saved in your investment and checking accounts. It is about teaching values and learning the trade-off and opportunity costs of financial decisions.

Adults-Only Family Meetings

Families communicating with adults attending to more critical responsibilities as a power of attorney, a successor trustee, or matters of the family foundation and philanthropic giving will require a deeper level of knowledge. It can be important to share where to find important documents, whom to call in an emergency, and your expectations of care. Estate planning knowledge needs to be communicated in every household regardless of the size of your estate.

Family Meetings with Kids

For families with young children, the conversations can focus more on values, mission, and gratitude. Explain how you tithe and what local charities you support and why. Older children may be ready to learn how to budget for family vacations or how to save for college. If travel, for example, is a strong family value, then conversations can focus on planning, trade-off decisions in lodging and airfare, or budgeting in categories that you assign as lower priorities to enable you to splurge more where it brings the family the most joy.

It is important to talk about money ideas now.

If we can cultivate better, healthier conversations now, not only will it improve the relationships in our families, but can bring about a greater level of financial security for all involved as your lessons and experiences are shared with one another.

Think about how you can align your goals with the people, causes, and missions that matter most to you. How will you best share your time, talent, and treasure with the world?

References:

1Kleinhandler, David. 2018. “Generational Wealth: Why do 70% of families lose their wealth in the 2nd generation?” Nasdaq. October 19, 2018. https://www.nasdaq.com/articles/generational-wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-generation-2018-10.

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Cassandra Smalley, CFA, CFP® is a fee-only financial advisor for women located in St. Petersburg, FL, and works virtually with small business owners, moms, and families across the country.