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.
- BGT
Love these three conversations. My children are small so I’m focused on Rule Number One. I remember my parents and I having that conversation. I had that conversation after rule number one was already broken at the age of six. Many regrets all these years later for violating Rule number one a second time which may have severed a valuable friendship by high school. Rule Number One is number One for a reason.
Thanks, Dario. “Remember Rule Number One, and, oh, yeah, don’t forget Rule Number One,” as a friend of mine joked today. Hope the summer is good for you and the family. – BGT
I agree with these..would have loved to have had my parents have these conversations with me. Unfortunately they used Rule One on their own children, as their parents (my grandparents) did with them. Growing up it was always “we can’t afford that”. And my grandparents favorite, when talking about anything other than food from the grocery store, “we don’t have that kind of money”. I learned frugality by their example, which is great, but I’m disappointed in the way my siblings and I were raised in regards to the secretiveness and lack of communication within the family. Will not make this mistake myself, the relationship with my children will be of trust and conversations will be had like the ones mentioned above. Thanks for the post Byron.
Thank you, Alex, for sharing your experiences and how they now inform your conversations with your children. Much appreciated. – BGT
What wonderful advice, Byron. I hope everyone who reads it has those conversations when the time comes. Thanks for that.
Thank you for the kind words, Bob. – BGT
My parents have never discussed finances with the children. We’ve never wanted for anything and we understand the general valuation of the family properties. They clearly taught us the specific principles (drive sensible vehicles forever, thrift when possible, invest and tithe). The furthest that either of my parents have ever gone in reviewing financial specifics is when my mother gently observed that my wife and I tend to live “higher on the hog than they do.” We had purchased a Cadillac and the disappointment oozed through their smiles as they said “It’s a beautiful vehicle, Son.” Almost as if I had brought home a bimbo for them to meet. “She’s pretty but is she really worth it?”
Thanks, wfbjr. Very interesting insight, and I like that you included ‘tithing’. It’s a term (and practice) not used enough these days. It’s also been awhile since I heard the term “living high on the hog”. Love it! – BGT
Mine was similar in ways and different. My family as tradition, serves in the armed forces as officers then get out, officer housing is segregated by rank etc so everyone was similar. I just assumed everyone else was like us. I would visit grandparents and yes the places was splendor, I just never dwelled on it much.
I went to boarding school later and it was largely the same thing. It was something we just didn’t talk about. Now for spending money I worked labor on our horse farm and was paid cash and it was to learn the value of money etc. I got an old Jeep with 180K miles, my brother got an old company car from my grandfathers and my sister got his most recent one. Normally, they all are just sedans or small SUVs. Nothing flashy.
I am a graduate student now and have a range of my own businesses and they are just now having the discussion with me. When it came to education, money was not ever a concern, but I saw many kids get brand new Range Rovers etc in undergrad or in boarding school and was just thought it was just odd, I didn’t understand WHY someone would bother. Now I have to meet with the custodians, lawyers, review plans but I haven’t taken a dollar from anything minus education. When I get married perhaps, for a house and this and that I may but that isn’t this second. I wanted to kind of chart my own success in business. I think they waited until we truly understood money, what it is, what it takes etc. We never really were rebellious or were concerned with it so there was never really any intervention needed. They trusted we just knew based on the strict upbringing with work etc. My brother worked fast food in high school, my sister worked for the horse trainer and was a waitress. Both my brother and myself have also served in the armed forces, but in a part time reserves manner while doing other pieces of our lives. I am more involved now as family is getting older and I am the oldest male so I am the custodian of this generation.
For what it’s worth, I bought my first new car ever, it is a pick up truck, comfortable, can move the horses for the hunt, and cheap to maintain as well as not highly flashy. New ones get decent mileage too.
Thank you for sharing, Josh. Great to hear about your family values. Much appreciated. – BGT
My mother used to tell me, “Every family does things differently and in this family we… (a comment on whatever it was I had raised a comparison over.)” The other thing she occasionally snuck into conversation was, “Never say ‘I can’t afford x.’ You can choose to afford anything you want, you can also choose not to afford a thing if you decide something else has more value.”
– Kathleen
Excellent advice. Thanks for sharing. – BGT