As a follow-up to the article written last quarter (Poor Kids), and since it’s the cold and flu season…
Lottery winners and professional athletes are often used as examples of what can go wrong when one suddenly moves from “no money” to “lotsa money”. Too often, these real-life stories include a big check, extravagant spending, bad investment choices, and a lot of pain.
As “worldly and sophisticated” men and women, we may think to ourselves, “Wow, that was dumb—never happen to me.” Well, that may be true, but what about our children who are teenagers and young adults? Have we sufficiently communicated with them and prepared them in case our lives are cut short unexpectedly?
Here’s a list to spark conversation:
- Reality Check – Preventing affluenza begins with discipline. If your child is still living at home or college and dependent on you for income, make sure that they are being financially responsible. They should know how to balance a checkbook, pay off their credit card balances every month, and pay their other bills like rent, car insurance, etc.
- Be Generous – Involve children in philanthropic activities and encourage them to volunteer where their passion leads them. Share with them the importance of giving (both time and money) and of being a good citizen.
- Things are Just Things – Lasting joy comes from experiences and relationships, not from cars and toys. Teach your children that building wealth should not be viewed as the end goal. Money alone will not make you successful or happy. Instead, stress the value of doing things together, setting goals and celebrating personal achievements.
- Be Patient – If there were only one trait that you could pass along to your child, it might be wise to choose self-control and delayed gratification. Enough said—don’t always give in to every request. Just because you love your child and you can afford it, doesn’t mean you should.
- Word to the Wise – When appropriate, introduce your children to your financial advisor, your CPA, your attorney. If something happens, you will want your child to feel comfortable calling these trusted professionals for help and advice. It also shows them that there is value in building professional relationships.
- Create a Plan – As part of your estate planning process, make sure that you communicate your wishes with your children, as appropriate. No one likes surprises. Also, it is important that they know you trust them to be good stewards. Your words, and more importantly, your actions will most certainly stick with them long after you are gone.
An ounce of prevention is worth more than a pound of cure.