For middle and high school-aged children: At this stage, children will have interests that become more expensive. Whether it’s electronics, musical instruments, movies or concerts, children will likely be spending more and looking for financial support.
• Begin talking about the ways parents will (and will not) support their spending and introduce tools, such as a budgeting app, to help them learn responsible spending and money management.
• Introduce the basics of investing and finding real-world opportunities. For example, have the kids set up their own brokerage accounts and pick investments to get a jump start on their financial literacy.
For college-aged children and young adults: As young adults, the clients’ children will likely have many financial questions that arise as they navigate living independently, starting internships or jobs, paying taxes, and so on. This is a great time to introduce the children to advisors who can help them navigate the often confusing world of W-2s, 401(k)s, mortgages and investments.
For adult children: No matter how old the children are, there are always opportunities for learning and growth.
• The parents should consider sharing lessons about their own financial successes and failures. What do they wish they had done differently? What were their biggest financial successes and failures? These discussions might prove very helpful to children who have more life experience and can appreciate parents’ insights.
• As children marry and have families of their own, they may need more help thinking about their own long-term financial planning and support of their families. This is where transparency about family wealth and plans for that wealth can help your clients’ children devise their own financial and estate plans.
Principle 3: Encourage Opportunities For Involvement
This last principle is to involve the children in financial decisions that demonstrate family values and foster cooperation among the children and even younger generations. The involvement can come in many different forms:
• If the family regularly gives to charity, consider allocating a yearly amount for the younger generations to decide together which charities or causes to support.
• If parents hold an annual family meeting, consider having the children and grandchildren participate in all or part of the meeting.
• Set aside some funds (small or large) and ask family members to offer suggestions for investment opportunities that are aligned with the family’s expressed values. If your clients have not previously had a conversation about their values, this exercise can open the door to that discussion.
Beth Mayfield is a senior wealth strategist for CIBC Private Wealth Management in Atlanta, with more than 25 years of industry experience.
Caroline McKay is a senior wealth strategist with CIBC Private Wealth’s Boston office, and has 15 years of industry experience.