|
|
 |
|
| Family Matters |
The Good Financial Parent
Lee Hausner, Ph.D
01/01/2004
|
Financial Parenting
Monetary limitations or priorities are seldom discussed in some affluent families. Material possessions continually appear, and the supply of dollars seems endless. Little wonder then that children grow up naïve about financial responsibility, despite the fact that they will one day manage significant funds.
Financial parenting begins with an allowance, which should be given in three parts: one part for immediate spending, one part for saving (delayed gratification), and one part for philanthropy. As the child becomes older, he should be placed on a budget, learn how to balance a check book or use Quicken, use a credit card only as part of the overall budget, understand basic investment concepts, and be given work experience whenever possible. With increasing age, children should have the opportunity to work with the financial consultants of the family in order to develop a greater level of sophistication in money management, as well as an independent relationship with the trusted advisors of the family.
The establishment of trusts and the timing of distributions play a role in determining how each family member will ultimately contribute to the overall financial capital of the family. If distributions made during earlier career-building years are significantly greater than your child could realistically earn, the motivation for achievement may be seriously compromised. However, financial assistance can reasonably be given to young career builders to ensure educational opportunities, health coverage, reasonable housing (i.e. supplementing the rental requirements to assure safe housing, or a 30-percent down payment on a home), or to provide funds for an entrepreneurial wealth-creating venture, provided the young adult develops a legitimate business plan and has had experience in the desired field.
Not every member of the successor generations is expected to become a financial wizard. Hopefully, there will be some members in each generation who will develop the competency necessary to assume leadership in this area and become trusted financial resources for the family. However, all members of a financial family need to become responsible for basic financial competency.
When the parenting partners of financial families mutually support strategies for dealing with the challenges of developing self-esteem, maintaining realistic expectations, fostering the development of competency in all areas of their children’s lives, delaying instant gratification, and maintaining effective communication with all family members, they will be well on the road to creating the type of legacy family who will fulfill the mission statement of the 100-year plan.
|
|
|
|
|
|
|
