Financial Wisdom to Pass on to Your Children | Rodgers & Associates

You Can’t Simply “Will” Your Heirs to Carry on the Family Legacy.

Is a life well-lived measured by the size of our bank accounts and how much property we acquired? Or is it measured by our relation­ships and the condition of them when we leave?

What we leave behind, most impor­tantly our words and deeds, are reflected in the lives of those we touched. Are you taking time to teach your children and grand­children about the family and legacy you want to pass on?

Long before television and smart­phones, before almost anyone had money and surplus wealth of any kind, we knew that our parents and grand­parents could teach us so much about living. They were the ones who had experi­enced life’s ups and downs, they had gained perspective and had the quali­fi­cation to share their wisdom. Today as people are living longer, it’s not unusual to have four or five gener­a­tions alive at one time. We have a terrific oppor­tunity for each gener­ation to guide and inform the gener­a­tions coming after them.

After parents die, their wisdom and experience die with them unless effort is taken to learn from them. Parents need to teach the next gener­ation about how they acquired their wealth, and the respon­si­bil­ities that go with inher­iting that wealth. It seems that today many people have given up on the idea that the best of what we can offer of ourselves and experi­ences, can be passed on to our children. We cannot share our wisdom by adding their name as a benefi­ciary in the will.

Parents wield a profound influence on the choices their children make. Our children often live what they learn from us whether we want to acknowledge it or not. As parents, we need to remember our children watch what we say and do. We need to model good behavior, decision making, and responsibility.

Lesson 1: No Shortcuts to True Wealth

One of the most important lessons to teach is there are no shortcuts to acquiring true wealth, be it money or wisdom. Those who take shortcuts – lottery winners, marrying for money, or inher­iting a sizable estate without any prepa­ration that it was coming – often live dysfunc­tional lives, with their windfall creating larger problems than they faced before.

Receiving an inher­i­tance without any prepa­ration can be poison to children who will destroy themselves and their own families because they know nothing about the respon­si­bility of handling wealth. We must begin working with our children long before an inher­i­tance is received. It is up to the parents to teach them how to handle wealth and the respon­si­bility that comes with it.

Lesson 2: Use Wealth in Service of Others

The second most important lesson to teach is that everyone is rich when money, regardless of the amount, is used in the service of others, ultimately for family, friends and humanity. Thinking that the money we earn will just buy more stuff, and that more stuff is best, will destroy anyone slowly but surely from the inside out. According to Thomas Jefferson, the “pursuit of happiness” has to do with an internal journey to know ourselves and an external journey of selfless service to others. It is best for children to learn this from their parents at an early age.

A family, regardless of their wealth, should develop a culture that imposes disci­pline on the dispo­sition of their assets. Family dynamics improve when trans­parency, convention, and tradition drive giving decisions. I believe money should flow to the next gener­ation, who can release the wealth to their children in time. It will become wealth that has been grace­fully and wisely relin­quished – a gift that keeps on giving, a gift that cements parent-child relation­ships, not one that under­mines and confuses.

Lesson 3: Use Money to Bring People Together

A family should use money to bring people together. Money can divide, or money can connect, money can grow relation­ships or money can destroy them. Money is energy, it is there to employ. If you have money, does it control you, or do you control it? The answer is found when you examine your engagement with others in your life. It’s why some wealthy people die impov­er­ished, while some people of modest means who bask in the warm touch of family and friends die rich. Having regular conver­sa­tions with the next gener­ation provides an oppor­tunity to frame a different set of values and leads to a different kind of relationship between parent and child and a different commitment.

Reframe the family’s chari­table giving as a family project deserving of time and attention propor­tionate with the effort that went into making that money in the first place. Chari­table giving should not be tax driven; it’s values driven, with an emphasis on need and effec­tiveness. Anything less mocks those in our family who came before us, whose sacrifice, hard work and deferred consumption led to the donation.

Selecting worthy causes isn’t just a process for the rich but for everyday working people who have a modest amount of wealth to pass on. Don’t under­es­timate how even a small gift to charity can leave a big impression on children when they are included in that decision. Every family, regardless of their wealth, needs to have family meetings.

Your children need to under­stand that they are your legacy, not your money and posses­sions. For your legacy to flourish, you must get your children involved, work with them to create something and contribute something to your community for the benefit of others.

Rick’s Tips:

  • There are no shortcuts to acquiring true wealth, be it money or wisdom.
  • Everyone is rich when money, regardless of the amount, is used in the service of others.
  • Every family, regardless of their wealth, needs to have family meetings.