Navigating Wealth

Educating Children About Money

Many times, I wish I had more money. Who wouldn't want to fly in life's business class? But there is one area where I wouldn't trade places with my affluent clients, and that is the educational questions they grapple with. Rich parents fear that their children will grow up to be corrupt, and I can understand that fear.

This concern is particularly pronounced among parents who made their own money, although it also exists among those whose families have been wealthy for generations. The latter sometimes benefit from family traditions that guide them in dealing with money and educating the younger generation. However, high-tech millionaires, for example, cannot draw much in this regard from their parents who were researchers at the Weizmann Institute. Parents who made their own money grew up in a different economic status than their children, making it impossible to recreate the family-economic context that spurred their drive for financial success.

The challenge for these parents is immense, not only due to the lack of a family tradition of handling money and the vast difference between their childhood and their children's but also because they often haven't paused to consider the example they set while amassing their wealth. They didn't stop to check, as a concrete example and a metaphor, whether they give their children everything they ask for in the supermarket or expect them to choose between this snack and that snack. Such parents may experience a shocking awakening when they hear their child speak about money in a way that contradicts the values they hope to instill.

The issues I've described so far are connected to a broader societal problem: our difficulty in speaking frankly and directly about money. If we don't discuss it with our friends or partners, it's understandable that we struggle to talk about money with our children. The irony is that even in liberal homes, where parents talk openly with their children about sex and drugs, money remains a taboo subject.

The results of this avoidance are twofold: children know much more about family economic privilege than parents think, or they are utterly disconnected from reality, unable to appreciate the difference between the price of a snack and the price of sushi, or ultra-orthodox about their financial future even when a driver takes them to school in a car worth a million shekels.

It is almost amusing to see parents deeply surprised by either scenario. Regardless, both situations create a significant gap that negatively impacts the children: the child who knows the family is wealthy but hears denial from the parents, and the child who doesn't understand where the family stands economically. Both grow up unable to trust their parents to mediate reality accurately.

Raising moral children is difficult under these circumstances. Values education cannot be based on gaps in trust, even if these gaps are intended to protect the children. The paradox is that wealthy parents fear telling their children about the family's financial status, worrying that once the information is revealed, the children's souls will be corrupted, making any further attempts at instilling values futile.

From my experience working with many affluent clients, the solution lies in creating a mental, communicative, and cognitive infrastructure—a language—that allows for serious conversations about money with children, appropriate to their age. As always in parenting, the first step toward establishing this infrastructure involves self-reflection.

Many parents are clear about the values they want to instill in their children regarding money but do not practice these values themselves. Therefore, the first step is to ensure that what you, as parents, expect your children to believe in matches what you live by. For example, if you preach that luxury is not essential while your life is a celebration of consumerism, your children will not miss the gap. Children tend to ignore what we say and internalize what we do.

After reflecting on your values and behavior, align and discuss openly the values you wish to instill in your children, your concerns, the contradictions between your values and lifestyle, and the questions that stress you when imagining the conversation with your children. Aligning is critical because children, like rain, find and exploit cracks, causing damage.

The next step is to have the conversation with the children. A good approach is to translate your values into concrete language, appropriate for their age group. I will elaborate on this in future lists. Until then, here's a joke my dad particularly enjoyed.

The first Baron Rothschild was known as a great miser, while his son was the well-known philanthropist Rothschild.

One day Rothschild Sr. was asked, "We noticed that you, who are really rich, do not like to donate your money. But your son, who does not yet have his own money, is a great philanthropist. How do you explain that?"

"The explanation is simple," replied Rothschild Sr. "His father is a Rothschild, but not my father."