"The Talk" About Money

I will admit that when I first saw a Billfold.com post about this PSA campaign from The National Financial Educators Council, I just about blew a gasket. But since this campaign is supposed to "elicit an emotional response that encourages parents to talk with their kids about money," I guess that's sort of the point. My reaction was less about the appropriateness of the images, though, and more utter amazement that financial literacy is being pitched as "a talk," emphasis on the "a."

Teaching your kids about money is not a one time event. It's not a conversation, a booklet, or even an all-day seminar where you play Tony Robbins and motivate your kids to unleash the power of their bank account. Teaching your kids about money involves being a full-time, round-the-clock role model for financial behavior. And if you think your kids aren't paying attention, think again.

Children, especially young children, are incredibly sensitive to parents' emotions. When your entire security depends on the stability of the two (or one) central adults in your life, it pays to pick up on cues as to whether mom is overwhelmed or dad is prone to lash out. So what children are constantly picking up with their little kid antennae are the emotional signals you send out when you handle money tasks.

When you get agitated watching the cash register number creep up at the grocery store, little Suzy registers your stress level creeping up, too. Or when you go on a spending spree only to collapse later in guilt (or get in an argument with your spouse), little Billy might choose to play outside and stay out of the way. Of course, one or two or a few instances of these behaviors isn't a big deal -- it's the overall pattern that makes an indelible imprint on your child.

Which is not to say that I don't think you should talk about money with your kids. You should. You should do it often. By all means talk to them about compound interest and how to open a 401(k) and warn them about high-interest debt. But in my experience it's not a lack of information that gets people in serious trouble, it's a lack of emotional regulation. It's difficulty paying attention to stressful tasks. It's putting money in the place of love, or self-esteem, or self-care.

As a parent and role model, you don't have to be perfect. Even your money mistakes can be constructive, if you communicate about your struggles in an age-appropriate way and demonstrate sincere efforts to improve your behavior. It's healthy for children to see adults dealing with the consequences of their mistakes.

I appreciate that this PSA campaign is trying to get parents to associate financial literacy with other forms of keeping their kids safe. But I wish there were more tools to help parents deal with the truly hard parts of "The Talk," like why it's hard to keep on a budget, how to talk finances with a partner without arguing, and how to translate personal values into financial goals. Sigh, if I only had the money to create my own PSA campaign (or was even remotely savvy with Photoshop).

It's Hard Out Here for the Rich

I settled down this morning with U.S. Trust's 2012 Insights on Wealth and Worth as a little light beach reading (sigh... if only. I'm still at the office). Some of the findings knocked me out of my chair. Among them: 

• Six in 10 HNW parents are not fully confident their children will be well-prepared to handle a financial inheritance.
• The younger generation is more likely to have full confidence in their children's preparedness.
• Nearly four in 10 parents strongly agree their children would benefit from discussions with a financial professional.
• Just over one-third of wealthy parents have fully disclosed their wealth to children, while half report having disclosed just a little regarding their financial status.
• Nearly half (48 percent) of people over age 67 said, "I was taught never to discuss wealth."

Are you kidding me? Read between the lines here. Parents (and "parents" here can be any age between 18 and 67+, so we're talking in most cases about parents of adult children) don't think that their children are prepared to handle the wealth that will be coming their way. But the majority of them don't disclose the facts of the situation, and almost half of the older cohort don't seem comfortable discussing it at all. The younger generation thinks, "Of course I will handle this better than my parents did and will make sure my own kids are prepared," but these are the same people the older genation thinks are not well-prepared to begin with. Finally there is the wish that some financial services professional will just step in and set it all to right. Give Junior the Facts of Wealth talk and suddenly he'll morph into an upright steward of the family fortune. Oy.

Responsibly handling money (whether it's a thousand dollars or a hundred million) has a good deal to do with information, but even more to do with intangibles like maturity, the ability to moderate impulses, and the formulation of meaningful goals. To successfully pass wealth from one generation to the next the tasks of money management must be imbued with positive associations, but these bullet points indicate strife, discord, and intergenerational blame.

I know that it's not a popular past-time to bemoan how hard it is to cultivate new generations of rich people, but it always makes me sad to see money as a source of emotional constipation in families. In all of the wealthy families that I know and have worked with, money is the dark matter that exerts a gravitational pull on all involved. The healthiest way to deal with this is to bring it out of the darkness and acknowledge it's influence on relationships and behavior. Money can do great good in the world and can be a source of positive family identity. But unhealthy families create unhealthy financial behavior again and again and again.