Educate Your Children: Advice on how to share your family's wealth secrets

Last Updated:
April 12, 2019
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Educating children presents a challenge in every family regardless of the level of wealth of your family. Due to their unique circumstances though, knowing how and at what age to start teaching your children about family wealth can make all the difference when they ultimately grow into adults.

Preparing them early, providing effective tools of responsibility, instilling good morals, and teaching them how to make sound financial decisions are the keys to educating children of wealthy families.


Stewardship is the responsible overseeing and protection of something considered worth caring for and preserving. Your family's wealth belongs to the whole family and should be treated with certain limitations.

Many wealthy families give their children far too much too soon. This often creates a sense a sense of entitlement and privilege, along with no sense of responsibility; distorting the line between need and want. Parents should begin by teaching a child the value of a dollar. Learning the difference between need and want will instill more responsibility.

Be a Good Role Model

Teaching children how to be good stewards of family wealth begins within. Parents should inform their children how the family wealth evolved and teach the children the specific values and anticipations that come with owning such wealth.

One effective way children learn to deal with money is by watching how their parents handle themselves with their money. Another way is by actively making money on their own by getting a job or creating their own business; effectively making responsible, thoughtful decisions about money they earned themselves.

How to Educate Children about Investments

The simplest form of investment is to put a percentage of money earned in a savings account and earn interest. Decisions become more difficult when there is a lot of wealth, especially when a family is trying to teach a child how to invest money wisely. Decisions need to be made whether to reinvest back into the business or into various investment vehicles.

Whether the child has worked at some sort of job (where money is earned) or is learning to manage money by investing an allowance, a financial advisor can provide invaluable insight for the child. Furthermore, families can access many outside resources including numerous investment books and courses to initiate the discussion.

Start Early

Take your children with you when you visit your financial advisor and let them listen to the discussion. After the meeting discuss the decisions you made and why. Ask them what they might have done differently. As your children grow older, include them in financial decisions and let them speak with the financial advisor. You will be able to learn about their communication style and understand what values are important to them.

Institute Values

Be sure there is a clear family/business mission statement that helps your children understand what values are important to each individual, the business, and the family as a whole. You may talk about what values contributed to the business success and the family's current wealth, how you go about making decisions regarding investments, and how the family's wealth has been used to promote charitable goals.

Inspire Philanthropy

Encourage children to talk about a charity that is particularly important to them and give them an opportunity to donate a portion of their earnings or allowance to that cause. It's great if the child finds a charity without prompting. Additional reinforcement could come as the parent offers to match the child's contribution.

When deciding how to educate children of successful family businesses with wealth, the bottom line is preparing the child to be morally and financially responsible. At the end of the day, doing this will help them develop good financial habits. From the outset, be open and transparent about the family's wealth, and discuss the consequences that could result from irresponsible spending, bad financial investment decisions, and unstable economic factors.