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Business Apr 11, 2023
Photo courtesy of Jean D. Koehler
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According to a recent study from Ameriprise Financial, eight in 10 people say passing on their financial values to the next generation of their family is important to them.* That’s with good reason. Financial wisdom is a gift that can have lifelong rewards and last longer than a monetary gift. If you’re looking to impart financial values to your children, 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 must be paid each month. Explain why you save for unexpected expenses as well as larger purchases. It may surprise them to learn that it costs money to borrow money. Remove 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 in productive ways.
- Provide guardrails. Give your child the opportunity to learn limits, even if your own resources are plentiful. Help them identify the difference between what they want and what they need.
- Help them save. Encourage your kids to save at least a portion of what they earn through allowance, chores, or a part-time job. Show them how small steps can take them far. Like any habit, saving takes practice before it becomes second nature.
- Show as much as you tell. Your children are watching where you invest your time and money. See that your actions align to the messages you want your kids to receive.
- Involve kids in charitable causes. Children learn valuable lessons by helping others who are less fortunate. Allow them to choose a charity to support. Volunteer and fundraise together. Encourage them to set aside a portion of their own money that they can donate to causes they care about.
- Promote balance. Help kids see that money is a means to an end, rather than an end itself. Impart the necessity of making money, but not at the expense of everything else that is 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 may create confusion and misunderstandings. An estate plan is a great example of financial discipline and generosity. Adult children can benefit from knowing about the strategies you use to preserve and grow generational wealth. They may need guidance on what happens when money is passed on, including how to set up an inherited account and how to manage and grow a financial windfall.
- Keep the conversation going. Money talks don’t need to be one-sided lectures. Let your kids ask questions. Ask them about their own financial goals and dreams. 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 become adults, introduce them to your financial advisor. With insight into financial planning in action, they’ll be more apt to apply these principles to manage their own finances.
*Ameriprise Money & Family study (2022)
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Jean D. Koehler, CLTC®, CRPC®, RICP®, CKA®, is a Financial Advisor with Ameriprise Financial Services, LLC. in Arcadia, Ca. She specializes in fee-based financial planning and asset management strategies and has been in practice for 22 years. To contact her, please visit her website at https://www.ameripriseadvisors.com/jean.d.koehler/ or call her office at (626)254-0455. 55 East Huntington Drive Suite 340, Arcadia California 91006.
Ameriprise Financial and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.
Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
Ameriprise Financial Services, LLC. Member FINRA and SIPC. © 2022 Ameriprise Financial, Inc. All rights reserved.
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