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Teaching children to appreciate the value of money is never easy, especially if they’re growing up in a family that is financially healthy. But there are ways to keep kids grounded, according to Robert Frank, a senior writer for The Wall Street Journal and author of Richistan: A Journey through the American Wealth Boom and the Lives of the New Rich. Here are some of his tips:
- Value of Money: A colleague of Frank’s teaches his kids about money whenever they go to a restaurant. When his kids want to order a soda, he encourages them to drink water instead and then gives them each US$1. They drink a lot of water, which is healthier, and get to learn about the real value of money.
- Talking the Talk: Frank says stories of hard times in the family help keep kids grounded. That’s especially powerful for today’s wealthier families. “One kid I interviewed loved to tell the story of how her dad had to strap tires on his feet during his first job because he couldn’t afford shoes. That story stuck with her.”
- Scoffing at Waste: Frank also says it’s useful to talk about how other families squandered their hard-earned wealth on excess spending, and were eventually left with little but memories. “The phrase ‘shirtsleeve to shirtsleeve in three generations’ should be posted above the door of every rich household as a warning.”
- Setting Expectations: A colleague of Frank’s told him about his family financial plan. He planned to pay his kids’ college tuition, give US$5,000 toward a wedding, help with a down payment for a house and leave them some money for retirement. This shows “where I think my financial responsibility ends and where theirs will begin.”
- Open Communication: Frank says it’s important to be clear with kids at an early age what they are—or aren’t—going to inherit. “Some people say they don’t want to spoil their kids by telling them what they will receive in an inheritance. But kids may assume they’re going to get a lot anyway— maybe even more than they actually will receive. It’s best to be upfront and control the expectations early on.”
This article has been adapted from an article previously published in Standard Chartered Private Bank’s online publication, The Journey. The article was originally written by David Upton. One of EO's partners, Standard Chartered Private Bank is headquartered in Singapore and is the private banking division of Standard Chartered Bank. To learn more, visit www.privatebank.standardchartered.com.