So often, I am asked, “How do I talk to my kids about…”
Let them bob in the pool
I often suggest to clients that they create ways for next-generation family members to “bob in the pool”—to participate in the day-to-day activities of managing the family’s Financial Capital from the earliest days, at a level appropriate to their age and stage.
The swimming metaphor applies throughout life. Parents have an understandable desire to shield kids from the potentially dangerous and dark side of wealth. But too much shielding is like keeping kids from water: we prevent them from learning skills that may save their lives.
How do we teach kids about water safety? We bring them in the pool with us as babies, holding their heads out of the water, splashing their chubby tummies. We teach them to blow bubbles. We enroll them in swim lessons. Later, some will join the swim team, or take up diving or synchronized swimming, and our cars and laundry rooms will become littered with soggy towels and the scent of chlorine. They’ll learn to scuba dive, or sail, or windsurf, taking those hard-earned swimming skills for granted.
We teach our kids to swim because water is delightful, but also because it is dangerous. We recognize that navigating through water safely requires exposure, training, practice, and skill. We know that when our children come to love and respect the water, they also grow as individuals: they become fitter, stronger, more agile, independent, and resilient.
This applies to Financial Capital, too.
Trying to shelter kids from the dark side of wealth is akin to keeping them on dry land, avoiding the water at all cost. It is like postponing swim lessons until they’re adults. Have you ever watched an adult learn to swim? They will overthink it, or cling in terror to the side, or—worst-case scenario—out of embarrassment, pretend to be a better swimmer than they actually are, and end up in serious danger in the deep end of the pool.
So, why don’t we talk with our kids about Financial Capital: money, trusts, or the value of our businesses? For so many reasons: We worry about exposing kids to wealth because we fear they will become entitled, enabled, spoiled, wasteful, ungrateful, lazy. We worry they will disclose information to their friends that is private and confidential. We worry they will blow the opportunity that is their Financial Capital by spending it on impulse purchases and frivolous whims.
But, those fears miss a central reality: access to Financial Capital becomes dangerous, like water, when a kid doesn’t know enough about it, and hasn’t had exposure to it—hasn’t belly-flopped, inhaled water, or capsized early on, when someone was there to pull them out. Just as they learn to deal with water, kids have to grapple with Financial Capital over time in order to learn to manage it.
The fundamentals of Financial Capital lessons take many forms: managing an allowance, getting a job, opening a bank account, making a budget, learning about investments, contributing money to a valued charity or cause. These are the equivalent of learning to float, swim strokes, dive, avoid dangerous currents. Books like Jolene Godfrey’s Raising Financially Fit Kids can be very helpful in building kids’ knowledge and helping them respect Financial Capital.
Another key point for parents and advisors who teach kids about wealth is to link the concept of Financial Capital with the concept of Human Capital. Financially responsible kids respect Financial Capital because they understand what it can do—and what it can’t. Money, by itself, is not what drives happiness or success. A person is not measured by what he or she can buy, but what he or she can do. Money is, first and foremost, opportunity, but it is opportunity without focus. When we teach kids that the power of Financial Capital is realized only when they link it to their own Human Capital, and give that opportunity a focus, then they begin to understand how they might put it to work.
JFK said, “Of those to whom much is given, much is expected.” My colleague, Don Opatrny, of The Lovins Group, speaks often about the importance of the balance of giving and receiving. Kids who see water purely as a playground fail to respect its dangers, and kids who focus only on what they’ve received—who see money purely for what it can buy them—are equally at risk. JFK’s reminder brings the balancing point of expectations to gifts of wealth. What is complex is emphasizing the balance between the reception of wealth and the resulting expectations that go with it, in a way that doesn’t dictate a specific outcome.
Kids who have taken swimming lessons respect the water and their own skills, and can enjoy swimming and water sports safely for a lifetime. Likewise, kids who respect Financial Capital, who appreciate the opportunity inherent in Financial Capital, and are energized by the possibilities it can create when harnessed to Human Capital, are well prepared to steward all their capital responsibly.
“Swimming Lessons” is authored by Amelia Renkert-Thomas.