Don't Change That Dial!

There you are, driving to pick up the kids from school, soccer or kung-fu class, listening to the news or your favorite talk host on the car radio. While the kids buckle up, you may be in the habit or switching to a music station you can both tolerate or hitting the off button. Instead, why not turn up the volume a bit?

Let the kids catch a few minutes of whatever issue or problem is being discussed. You even may want to set the dial to a program about money or consumer issues--with syndicated hosts such as Clark Howard, Bob Brinker, Dave Ramsey or Joan Hamburg--that might be on at that time.

It's an opportunity to spark an interesting conversation with your kids. Start out asking a younger child:

• What do you think the announcer is talking about?

• Do you have any questions about that?

• What do you think about this issue?

• What are some reasons that someone might believe the opposite point of view?

• What family members or family friends do you think are most affected by this?

Of course you can do the same thing at home, with the television news, radio or internet. Or watch one of the many cable programs that focus on wealthy kids, such as "Cribs," "My Super Sweet-Sixteen," or any other show involving parents and teens.

• What unintended messages about their financial values are the parents sending their kids by how they dress, what they say, their expressions and gestures?

• Which characters seem the most spoiled and why?

• When have us (parent or child) acted or thought in a similar way?

• How have we dealt with similar situations in our lives?

• How does money seem to make the characters' lives and relationships more difficult or complicated -- instead of easier?

Money doesn't have to be an uncomfortable topic! In fact, it can be fun, and a wonderful way to engage kids -- especially when they reach the sullen teen years -- in conversation.

Impact of Wealth Transfers

Recently Bob Paquette, morning host on the local public radio station WFCR-FM, Amherst, Massachusetts, interviewed me (Jayne). (You can hear the interview here.) Mr. Paquette’s last question was so provocative that Rich and I found ourselves having a lengthy discussion about it.

The question: Does the way the rich get ready to transfer their wealth to the next generation have some impact on the rest of us?

Here are the highlights of our brainstorming that resulted.

If they’ll be giving a lot of it away that will be beneficial to society…

In the aggregate, the extent to which our children have their expectations – not their needs or wants – might be interesting to watch. Perhaps their parents told them, “You don’t need to worry about your financial future.” Their children may have thought their parents meant, “We’ll take care of all your financial needs.” But the parents may have meant, “You don’t need to worry because we have confidence in your ability to provide for yourself and your family.” The adult children could be in for a very rude awakening.

In other situations, the parents may have intended to support their adult children’s lifestyle, but can no longer afford to do so after the financial meltdown, or because their own health or other circumstances have changed.

Many families don’t communicate at all about money, leaving the children to make assumptions or simmer in uncertainty their entire lives, wondering if they will inherit and how much they might inherit.

The bottom line is a lot of people will be ill prepared to take care of themselves and their families. Parents give their children a tremendous gift when they clearly communicate their intentions. No matter how much or how little they intend to bequest to their children, they do their children a huge disservice when they don’t expect them and prepare them to be productive.

We hear parents say all the time, “We want our children to have it easier than we did.” What a shame that is! Parents who try to protect their children from adversity, who bail them out of every mistake and cushion them from every possible source of pain are robbing their children of critical experiences to make and learn from their own mistakes. Resiliency can only be acquired through trial and error, but getting oneself into scrapes and having to figure out how to get out.

People who have built successful companies or worked hard to achieve success in any profession or job often look back on their early struggles with a gleam in their eyes. They are proud that they survived. They are not afraid to take calculated risks because they have learned how to extricate themselves from the grit and grime of failure. Parents are wise to let their children make some mistakes as they grow up, when those mistakes are bound to come with a smaller price tag. Better they lose $20 on an unwise purchase than $20,000 on a hair-brain investment scheme later in life.

Wealth Resources

Since we began the research that turned into our book, Kids, Wealth, and Consequences: Ensuring a Responsible Financial Future for the Next Generation (Bloomberg, a Wiley imprint, February 2010), we stumbled upon many terrific resources about wealth. We continue to refer to these resources to keep up with new events, proposed legislation, statistics, trends and social and economic developments that impact wealth.

Now we have found a way to share those resources with you, on the “Wealth Resources” page of our website, www.kidswealthandconsequences.com. On this page you will find links to interesting statistics, provocative articles, weblogs, upcoming events, wealth networks and games.

As we find new material, we will update the page. You can also feel free to point us to recent wealth-related articles and such by posting a comment below, or email us your suggestions.

What Have We Learned from the Financial Crisis?

From time to time we feel compelled to share our analysis of thought-provoking events relating to wealth management. We hope you will find our first blog informative and useful. We welcome your feedback!

Those who debate about when the economic crisis will end are asking the wrong question.

The right question is: what we can learn from the financial turmoil? People from all socio-economic strata need to rethink their connection with money and the skills their children need to be successful in any economic environment. Kids who grow up as if they need to make it on their own, are likely to handle life and money responsibly. Those who cannot lead productive lives become dependent and depressed. Often they engage in dysfunctional, risky behaviors. Parents at all ends of the economic spectrum would be wise to think deeply about their choices: how they spend, save and invest, and how they communicate-consciously and unconsciously-with their children about their financial values.

Music rapper Sean Combs, better known as P Diddy, was not concerned about the message he sent to his teen when he gave his 16-year-old Justin Dior Combs a $360,000 car earlier this year on the TV show "My Super Sweet 16." Responding to some criticism on an ABC Nightline interview Combs said, "No-body knows the lessons that I've taught my children to understand, if they are mentally ready for that," he said. "It wasn't even about a lesson; it's what I wanted to do. I could do whatever I want to do and you can't question me about it."

The recent "bling ring" case in the news portrays the potential consequences of failing to impart financial values to children. Six teens, who robbed upwards of $3 million during a burglary spree at the homes of celebrities such as Paris Hilton, Lindsay Lohan and Orlando Bloom, were stealing for kicks, not cash. The teens were from affluent families who shared an obsession with celebrity culture. They partied in their victims' homes, leaving their fingerprints everywhere and flaunting themselves before security cameras.

They almost begged to be caught. Perhaps they wanted the one thing their parents and the public may not have lavished on them: attention. Their behavior illustrates the unintended consequences of living in a super-wealthy environment: entitlements and ennui.

But it doesn't have to be that way. During a recent appearance on the Oprah Winfrey Show with his wife and three children, celebrity Will Smith said he tells his children, "'Mommy and Daddy are rich. You all are broke.' We don't allow them to just sit around. We talk about the concept of the group and the necessity of you adding to the family. Then you have to add to your neighborhood, and then you have to add to humanity."

Another example: Peter Buffet, son of one of the world's wealthiest men, Warren Buffett. Peter, a musician, recently published a memoir, Life is What You Make It, in which he details his remarkably modest upbringing. His father was present nightly for dinner and emphasized the importance of values and pursuing your dreams. He informed Peter and his siblings they would not become trust-fund babies; he planned to give most of his fortune away. The children would have to make their own way in the world.

Wealth, for all the wonders it can bring, has a dark side, especially on the next generation. It takes enormous effort and thought for affluent parents to raise children who are capable of being productive and finding happiness within themselves, not just in the material trappings of their lifestyle.
Click here more information about Kids, Wealth, and Consequences -- the book, workshops and resources.

If you have more interest in our work shop or book please click on the links below:
Download our workshop brochure at http://kwandc.com/workshops/brochure.pdf
Or find out more by visiting our website -- http://kwandc.com/.

Please feel free to contact either of us for more information.

Sincerely,

Jayne Pearl (413-256-1310) and
Richard Morris (847-328-3096)

Email Us