The Kids Are Alright

MCF Intersection

A regular snapshot of the trends, news and research in the world of philanthropy — and its impact on business.


One of the most important questions almost all high net-worth families have is how to raise responsible, grounded children. Money can stunt children’s sense of perspective, independence, and life direction, causing both entitlements about—and dependence upon—family wealth. It can also impede them in developing the emotional skills needed to live a healthy, independent life. It’s no wonder I’m often asked by clients, “How do we provide for our children while teaching them strong values and the responsibilities of wealth?”

The answer varies depending on your child’s personality and aptitude of course, but in general, here are my rules of thumb for each age and stage:

Younger kids: Model your values

Remember that values are caught, not taught. Your children will pick up more from seeing the choices you make about how you spend your time and money than they will from what you say. If you want them to learn frugality, humility, and good judgment, you need to live those values. As Duke University’s respected Dr. Kelly Crace put it: “If I followed you around for 3 weeks, I could tell you exactly what your top 5 values are.”

Consider also creating traditions and habits to teach core money lessons. For instance, label three jars—saving, spending, and giving—to encourage the important life skills of thoughtful choices, delayed gratification, and generosity. To impose critical boundaries and encourage independence, limit the number and value of the gifts you give for holidays and birthdays.

Teens and young adults: Teach financial skills, but let them make mistakes

Give older kids the opportunity to learn practical money, wealth, and giving skills. Open up their own investment account with your advisor. Encourage them to take a course about money. Give them a small philanthropic budget or take them on a service trip.

Teach them about budgeting. Help them figure out how they might save for an important purchase—and consider matching whatever they can earn. If a college student blows through their spending budget halfway through the month, letting them do without for the rest of the month can help teach them budgeting, self-discipline, and planning—all important life skills.

Talking about your family money history can also be a great family exercise. How was money talked about around the dinner table when you were growing up? What were the main money messages you learned from your family? What messages, direct or indirect, did you receive from your parents or grandparents? What are the basic rules you tend to live by? These discussions not only foster conversations about important values and traditions, but can help family members swap stories and memories.

Be careful not to parent with your wallet. Money and time can solve most problems; but money can solve them too quickly. Many families use money (and influence) to allow kids to avoid natural consequences, but those consequences are what allows them to develop the emotional skills they need to live a healthy life.

Adult children: Celebrate their independence and support them at key moments

Remember that growing up with financially or vocationally successful parents or grandparents can cast a shadow on the rising generation. It can be paralyzing and may feel impossible for them to live up to that standard. Foster and celebrate your child’s interests and dreams, no matter whether they correlate to your own.

Consider life transitions as logical moments to be generous. That’s often when the money is most needed. A wedding? Starting a business? Buying a house? After the birth of your grandchildren, or daycare or tuition bills start hitting? Most people don’t need a lot of money at age 25 or 75. But there are key points in the middle when a large lump sum can really help.

When it comes to discussing the size of the family estate, barring imminent health issues, it is often better to wait until children have begun establishing their own careers before getting into the details. While you want to wait until they’ve tasted their own success and developed a respect for the value of money, don’t put it off forever. You also don’t want them to learn the size of your wealth on the day assets are being transferred; then there’s no time for them to become prepared to manage it.

Wealth can be an amplifier of all things—both positive and negative. If not properly managed, the very resources that should help a family flourish, can lead to its undoing. Parents and family elders need to prepare their heirs with the same dedication and discipline that they brought to building and managing their wealth.

Your children are your legacy. Make sure you equip them with all the skills, character, and experience they need to live successful and rewarding lives.