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Teaching the Next Generation to Plan Financially

Talking with your kids or grandkids about money management or end-of-life wishes can be uncomfortable. Often these subjects are considered somewhat anxiety-inducing, but by addressing topics like these early and simply, you can help ease fears and concerns – and by extension, successfully ensure your legacy. When you’ve spent your time building wealth to be able to provide for your family and future generations, it’s important to be able to instill a similar sense of value in your kids or grandkids. Here are simple steps to take to start the conversation and teach the younger generations how to plan financially.

It’s never too early to start

Financial literacy or money management may seem like topics that are too complicated for children to understand, but teaching them basic financial concepts in a thoughtful way can be beneficial from a young age.

You can begin by teaching them basic saving concepts or saving for items they want versus items they need. Perhaps you want to introduce a charitable aspect to it and let them decide that for every new item they want to buy, they give away something they have.

Introduce more difficult financial topics as they age

As children or grandchildren get older, you can begin introducing tougher concepts. Currently 23 states in the U.S. require financial education courses in high school as a prerequisite for graduation. But even if you live in a state that doesn’t teach financial education in school, you can start at home. Explain concepts like debt, inflation, and taxes by using everyday examples (using the value of your house when you bought it and comparing it to today’s value is a good way to start). If your child wants to attend college, they might find conversations like this helpful as they navigate student loans or living on their own for the first time.

Have a joint discussion with your financial advisor

Having older children or grandchildren ask questions about investment or retirement strategies with a certified financial planner can be a great way to introduce more complicated concepts. If they are at an age where they’re starting their first job, for example, it might be a great opportunity to discuss different types of investment accounts, or why they would want to take advantage of an employer-matched retirement plan.

For some, it may be their first introduction to financial planning, and so it would be beneficial to see what working with a trusted financial advisor looks like.

Want to introduce financial planning to younger members of your family?

If you have questions or concerns about teaching the next generation of your family about financial topics, our advisors are happy to arrange a joint appointment to address the issues that matter most to you. Or you can invite them to a Chatterton seminar on a topic that you’ve been discussing at home so that they can continue to educate themselves. Discussing these topics now, even if they seem uncomfortable, might allow for greater financial success and comfort for generations to come.


The Team at Chatterton & Associates

Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. Neither Royal Alliance Associates, Inc nor its representatives provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

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