BUSINESS FAMILY GOVERNANCE, SUCCESSION PLANNING & RELATED ISSUES
The Financially Intelligent Parent
“The Financially Intelligent Parent” by Eileen and Jon Gallo proposes an 8 step strategy to raising successful, generous, and responsible children. Briefly, the 8 steps are:
- Encourage a Work Ethic: Children aren’t naturally diligent or lazy. A work ethic is a learnedbehavior, and it’s up to the parents to instill this behavior in their children so they carry it on later in life. A strong work ethic is based on the belief that we are personally responsible and accountable for what we accomplish
- Get your money stories straight: A “money story” is your open, honest and personal story of your relationship with money as you were growing up and until now. It is important to figure out your story so you can have an idea of your personal attitudes towards money and how you acquired these values. Understanding your own values is key before shaping and determining your children’s.
- Facilitate Financial Reflection: Reflective thinking is examining thoughts, emotions, ideas, and beliefs before and after an action. If parents actively encourage their children to engage in this type of thinking regarding financial issues, it is a great way to get them to understand why they make decisions regarding money. Ultimately, they will begin to appreciate that their financial needs go beyond simply fulfilling their present desires, and that it is important to save money for the future.
- The Importance of Being a Charitable Family: It is important to provide your children with more than just basic money skills, they need to grow up to be giving people in the best sense of the word. The most effective charitable efforts involve more than simply giving money, but giving time. This is because it allows children to see the effect that their efforts can have on others, and how it feels good to influence others in a positive way.
- Teach Financial Literacy: Teaching financial literacy is more than just teaching the concepts through a lecture or a book, children must learn how things work in the context of relationships and values. For example, a reasonable allowance is a good way to teach a child how to manage and plan their spending. Further, by earning additional money by doing chores around the house, it helps to teach them the value of work.
- Spend Time and Money in Ways that are Consistent with your Values: Though you may not be aware, children are extremely perceptive of the way you spend your money. Thus, the way you spend your money will communicate your values to your children. It is important to learn to be conscious about these behaviors so that you can communicate the right message to your children. The same goes with the way you spend your time. For example, if you spend an excessive amount of time working and monitoring your savings, your children may get the impression that money is the most important thing.
- Moderate your Extreme Money Tendencies: Extreme money tendencies come in many shapes and sizes; from excessive spending as a shopaholic, to extreme penny-pinching and refusal to spend on anything not absolutely necessary. No matter what the extreme behavior may be, the effect is often children questioning their own self-worth. This is because children tend to blame themselves for your problems. This is why it is important for parents to be awareof and critical of their own monetary behavior. Through this awareness, they can make a conscious effort to moderate and control extreme money behavior.
- Talk about the Tough Topics: Understandably, talking about money with your children can be difficult. It is not a comfortable conversation to have, and many parents will avoid it altogether. The toughest part about this issue is that there is no one way to approach it. Discussions will vary based on many factors; such as age of the child, type of question, financial circumstances, and more. It is just important to remember what you want to teach your children about money, and your own personal values. From here, you can evaluate what and how you want to talk to your children so that it helps them to understand what you are trying to teach. Regardless, if you feel a lesson or conversation is necessary, do not shy away from it because it may be uncomfortable.