Readers of this blog have mentioned more than a few times that they’d like to know more about issues that relate to Old Money culture and raising children, specifically how and when to talk to them about money.
I’ll put myself immediately in the position of Armchair Quarterback here: my wife and I don’t have children. However, I have discussed the subject at length with Old Money parents (and grandparents). I’ve also, over time, watched how their children respond.
Most of the kids turn out well. By that I mean they go on to lead productive, emotionally healthy lives. Most of them avoid the pitfalls of conspicuous consumption, a sense of entitlement, and laziness.
Old Money families tend to share basic Core Values that I’ve discussed in The Old Money Book. How they communicate those values to their children varies, of course, but I have gleamed some common threads. These are conversations about money that parents tend to have with their children at certain points in their children’s lives.
The conversations are few, but they are serious. Usually they are conducted in the living room, study, or dining room, with all family members present. Interruptions and distractions such as cell phones and television are not tolerated. Non family members are not present. Dedicated an amount of time and an exclusive space to the conversation communicates its importance.
The tone is straightforward, unemotional, and succinct. The expectations are clear: while questions from the children are welcome during and after the conversation, the behavior expected going forward is not considered optional.
Here are a few of those conversations, which I’ve given names to:
The Rule Number One Conversation: this conversation generally happens when a child is entering school for the first time, around the age of 6. This is the time, and school is the setting, where children begin to discuss their families. Rule Number One for Old Money families is that you do not talk about how much money your family has. You don’t talk about anyone else’s family money, either.
A child will probably ask ‘Why?’ The answers are simple: “The point of going to school is to learn and make friends. Talking about how much money a family has does not do either of those”; second, “You make friends based on whether or not you like that person, not how much money their family has”; third, “You want people to like you for you, not for how much money they think you have.”
Then the parent wraps up the conversation by saying, “It’s just not polite to do that. It can make people feel uncomfortable. It’s better to talk about things you’re doing or things you’re interested in. Alright?”
The Opportunity Conversation: this conversation generally occurs around the age of 16, when peer pressure can really kick into high gear with the availability of cars and clothes. Affluent parents who aren’t Old Money may purchase their children expensive sports cars for their 16th birthday, when most can legally drive. Wearing everyday school clothes can morph into logo-heavy fashion shows in public schools where uniforms are not worn.
So it’s time to have this conversation to communicate what opportunities are available to the child because their parents have money. This is key, as it gives definition to what should already be a given: We have money, yes, but it is very important to consider what we spend it on. To differentiate between the purchase of material possessions and the investment in life-enriching opportunities is vital to the future of the child. It’s a matter of priorities, and expressing those priorities in terms of choices.
“Yes, Tiffany has a new car. We’re not buying you a new car. You can drive one of the family cars, and we can use that same money for you to spend the summer in France, visiting museums, studying history, and learning the language.” This is a sample of the conversations I’ve heard parents recall having with their children at this age. The teenagers get opportunities, not material things.
The Stewardship Conversation: depending upon the existence or structure of a family’s finances, i.e., trust funds or investment portfolios, this conversation occurs between the ages of 18 and 21. At age 18, children are legally adults. If the parents die, the child inheriting money is empowered to pretty much do as they see fit with it. Trust funds and appointed trustees can moderate or limit an heir’s powers, but this conversation is still an essential.
In this conversation, usually had with a child in college, the parents give, perhaps for the first time, a fairly complete picture of the family finances: how much money there is, where it is, who is managing it on a day to day basis, and what is expected with regards to future preservation and use of it.
The parents communicate that they expect the child to be a ‘good steward’ of the wealth that is, one day, going to be theirs. The respective roles of lawyers, accountants, and investment advisors are discussed. Information contained in the family will or trust is shared. This is probably the longest of the conversations, and extended family and/or lawyers, accountants, trustees, or investment advisors may be present.
Note: if a child hasn’t been raised with Old Money values up to this point, all the safeguarding mechanisms in the world won’t preserve the family fortune or prevent the child from self-destructing. If the child has been instilled with these values, these conversations can act like pillars that support what’s already there.
I’d like to hear from everybody about this topic, especially parents. I think the more contributions we get on this subject, the better. Toward that end, I’d like to ask a favor: if you would, please forward this post to ten friends who have children, or who you feel were raised well. Ask for their input here on the blog. Again, I think the more people we get sharing their experiences and ideas on this very important subject, the better.
Thanks so much.