Newspaper giant, William Randolph Hearst once said, “One of the hardest things to teach our children about money matters is that it does.”
Most parents today are so busy with their own lives that they can barely handle the basics – keeping kids safe, free from danger, teaching them right from wrong in an ever-changing world. The bottom line is we are falling short in the area of teaching our children about the value of money and the concept of “whole net worth.”
Ask your clients to establish a money constitution – a mission statement of sorts that summarizes why money is important. Then be sure they implement it by creating a Family Governance Process – a process that allows them to set aside time to discuss money matters as a family. This practice engages the nuclear family to create a shared vision and a plan on how to achieve the outlined money goals. It also teaches children important tools for money management.
A fundamental principle of the “whole net worth” concept is family, and I recommend adopting a more holistic understanding of the term “net worth.” To build and sustain long-term wealth you need a well-diversified “portfolio,” which I refer to as four asset-classes that make up your whole net worth. They are: innate assets, learned assets, networking capital and financial assets. The bottom line is that as an individual you only have so much value. By tapping into your network and the networks of your family, your value increases exponentially.
I urge you to make it a point to educate your children about financial responsibility, and encourage your clients to do the same. The single most important thing we can do to prepare the next generation for the challenges ahead is to teach them the value of money. By viewing their net worth in a more holistic manner, your clients can draw upon not only their assets, but also the assets of their entire family, in times of need.
