(from Carl Richards’ New York Times’ Bucks blog, 8/6/2012 – click here for the original post. Carl is a certified financial planner in Park City, Utah. His sketches are archived on the Bucks blog.) His new book, “The Behavior Gap,” is on bookshelves now.
The discomfort is often at its worst with those we love the most: family. When was the last time you discussed money in any meaningful way with your kids (or your parents)?
For most of us, we probably haven’t sat down and had even the most basic of conversations about what money may mean to our family. If you own a business or have significant investments or other assets, at some point these money issues will have an impact on your family, even if it’s only a question of inheritance.
Learning to talk about money in a way that’s productive is important, and you may not even need to divulge your income or net worth to succeed. For wealthier families, however, it may be part of the discussion. Last week, Paul Sullivan outlined several examples of how unprepared some heirs felt when they received an inheritance. No one had talked to them or explained what was coming.
Jason Franklin, now 32, said he received a call from his grandfather’s secretary asking if he wanted to serve on the board of the family foundation. He was 21 at the time, and up until that point, he said he thought his parents were just affluent professionals like his friends’ parents. The invitation prompted questions.
“If your family has enough money to create a family foundation, that means you have to ask about issues of wealth,” said Mr. Franklin, who works for a philanthropic consultancy.
This may seem like a great problem to have, but it’s a problem just the same. I’ve written before about a friend who was determined that his kids wouldn’t felt entitled. From an early age, he met every request his kids made to buy something with, “We can’t afford that.” One evening when his oldest was a teenager, my friend’s son came to him concerned and said, “Dad, between homeless and Bill Gates…where are we?”
My friend realized that he had not communicated his intention clearly. He had avoided having discussions about money because, like most of us, he didn’t know how.
If you don’t take the time to talk about money, how will your family understand money’s real value? Have you talked to your kids about the relationship between hard work and money? Have you talked about the financial sacrifices, delayed gratification and the need for financial discipline? Have you talked to your kids about the only way to buy happiness?
You owe it to yourself and your family to get past the uncomfortable part and talk about the role of money in your family. Getting it out in the open can go a long way towards avoiding problems later.