By Matt D’Amico, CFP®, ChFC®
For many families, discussing wealth can be a sensitive topic, often avoided until it’s absolutely necessary. However, proactive legacy planning is essential. It involves preparing the next generation to be responsible stewards of the wealth they may inherit.
Open and honest conversations about money, values, and responsibility can bridge generational gaps, prevent misunderstandings, and verify your financial legacy truly reflects your family’s aspirations.
How to Prepare Heirs to Be Good Stewards of Wealth
Preparing your children to manage wealth effectively is a long-term endeavor that begins long before any significant inheritance is in sight.
- Start early with basic financial literacy: Don’t wait until adulthood to teach your kids about money. Introduce concepts like saving, spending, and earning at an early age. Give children allowances, encourage them to save for specific goals, and involve them in age-appropriate financial decisions, such as budgeting for a family vacation or a larger purchase. This lays the groundwork for understanding financial concepts.
- Encourage responsibility and work ethic: Even if your children won’t need to work for basic necessities, understanding the value of earning and contributing is crucial. This could mean summer jobs, internships, or even contributing to household chores that earn a small “wage.” The goal is to develop a sense of accomplishment and an appreciation for the effort behind wealth creation.
- Teach the difference between “needs” and “wants”: This fundamental lesson helps children develop healthy spending habits and prioritize. Discussing family budgets and how financial decisions are made based on needs versus wants can be incredibly insightful.
- Foster philanthropy and giving: Instill the idea that wealth comes with a responsibility to contribute positively to the community. Involve children in charitable giving decisions, volunteer work, or supporting causes they care about. This teaches them that wealth can be a powerful tool for good, fostering generosity and a broader perspective.
The goal is to instill financial literacy, responsibility, and a sense of purpose.
Creating Shared Family Values Around Money
Beyond practical skills, discussing your family’s philosophy on money is paramount. This helps align your wealth with your deepest convictions.
- Define your family’s “why”: Why is wealth important to your family? Is it for opportunity, impact, or a combination? Having a clear, shared understanding of the purpose of your wealth can and should guide future decisions. For example, if independence and innovation are key values, discussing how wealth can support entrepreneurial ventures or education aligns with that.
- Establish a family mission statement or values document: Some families find it beneficial to create a written statement outlining their collective values regarding wealth, work, giving, and family unity. This document can serve as a guiding principle for future generations, especially when making significant financial decisions.
- Discuss the balance of work, wealth, and life: Engage in conversations about the role of work in life, the dangers of entitlement, and the importance of personal growth. These discussions help children understand that personal fulfillment often comes from effort and purpose, not just inherited wealth.
- Regular family meetings: Formal or informal gatherings to discuss financial goals, charitable endeavors, or even current events impacting your family’s finances can create an open dialogue. These meetings normalize money conversations and make them a regular part of family life.
When and How to Introduce Your Children to Your Advisor
Introducing your children to your financial advisor is a strategic step in seamless legacy planning.
- Timing is key: There’s no single “right” age, but generally, when your children are mature enough to understand basic financial concepts and show an interest in their own financial future is a good time. This often happens in their late teens or early twenties.
- Start small and build gradually: Begin with less intimidating interactions. Perhaps your advisor can join a family meeting to discuss a specific topic, like the importance of saving for retirement, basic investment principles, or setting up their first budget.
- Focus on education and relationship building: The initial meetings should focus on education and establishing a rapport between your children and your advisor. The advisor can explain their role, how they help families, and answer any general financial questions your children might have.
- Explain the “why”: Clearly communicate to your children why you trust your advisor and why you want them to be involved. Explain that this relationship is part of a broader plan to pursue their financial well-being.
- Include them in estate planning discussions (eventually): As they mature and become more comfortable, gradually involve them in more detailed discussions about your estate plan, philanthropic goals, and the structure of any family trusts. This helps them understand the intentions behind your wealth transfer.
The goal is for your children to see the advisor as a helpful family resource, not just someone who manages money.
Make the Next Legacy Planning Move
Don’t let legacy planning and wealth be a source of confusion for your children. Start the conversation today.
Networth Advisors is here to help you every step of the way, offering a comprehensive suite of financial planning services.
To schedule a meeting, call (800) 822-3639 or 724-746-3585 or email schedule@networthadvisorsllc.com.
About Matt
Matt D’Amico, CFP®, ChFC®, is a registered Investment Adviser Representative and financial advisor at Networth Advisors, LLC, a financial planning and wealth management firm in Canonsburg, PA. The firm is dedicated to helping clients enjoy a successful retirement, specializing in income planning and legacy preservation for pre-retirees and retirees. Matt excels at simplifying complex retirement concerns to help clients make smart financial decisions.
Matt discovered his passion for finance in college, inspired by a trusted mentor, and earned a degree in finance and business management from Saint Vincent College. Before joining Networth Advisors, he gained valuable experience at New York Life and MassMutual, where he obtained his Life, Accident & Health Insurance Licenses. Matt is also a CERTIFIED FINANCIAL PLANNER® professional and Chartered Financial Consultant®.
Outside of work, Matt is a sports junkie and music enthusiast. He enjoys spending time with friends, embarking on adventures with his wife, Kayla, and their mini labradoodle, Nellie. He is also the co-author of Networth for Retirement: Mapping Out Your Journey. To learn more about Matt, connect with him on LinkedIn.
