As parents, you have probably often heard that you should speak openly and often with your children about all kinds of tough issues – bullying, alcohol, and drug use to name a few. You may wish to add another topic to the list: money. Like other important conversation subjects, learning about and developing sensible financial habits is a long-term goal for parents, and all the more challenging for people with substantial means.

Tips

Here are some of my favorite tips for teaching children about wealth and the responsibilities associated with it:

1. Start Early and Slowly – Elementary education may include early introduction to currency and basic addition and subtraction, but as parents you can augment and provide your kids with hands-on and experiential learning about money. Every day trips to the grocery or convenience store offer an opportunity to help children learn how much things cost – in dollars and cents.
2. Earnings and Savings – Opening the first savings account with your child is a "right of passage" many remember for years to come. It's a key step in learning about saving (vs. spending) and later, about the basics of principal and interest.
3. Allowance – Providing a reliable and consistent allowance is a wonderful tool. I recommend tying the allowance to the completion of household duties. The amount of the allowance and the difficulty of the responsibilities should grow, increasing with the child’s age and maturity level. However, experts caution about overloading children who are already tightly scheduled.
4. Shopping Decisions – Allow your kids to spend and save their money at their own rate. Avoid the temptation to "rescue" him or her from a poor purchasing decision – there's no better way to learn than to make a few mistakes and live with the consequences.
5. Volunteering – Since children with substantial means never “have to work”, it may become difficult for them to learn "the value of a dollar". In today's economic climate, with paying jobs a scarcity, I recommend volunteering as a way of experiencing a "real job". The critical lesson to be gained from volunteering is that "wealth is not entitlement" - money is earned through hard work.
6. Giving – Allow children to explore and select worthy causes of their choice. They will learn first hand the joy of helping others, and gain self-esteem along the way. This step also offers you an opportunity to "set an example" for your kids to begin to model your behavior.
7. Consider Contributions to Higher Education – Earning and contributing to the expense of college can drive home the real value of a college education.
8. Set Expectations – Once children have grown into adulthood and graduated from college – experts recommend establishing rules and responsibilities, such as having your offspring pay for rent, if they are returning to live at your home.
9. Adulthood – Once your children have become adults and self-sufficient, it's worthwhile to bring them along to financial and estate planning and advisor meetings. You want them to feel comfortable and capable of consulting professionals outside the family as needed. In this fashion, your family members begin to develop a further understanding of the work and attention required to effectively manage and pass on wealth to the next generation.

As you can see from these tips, learning about money is a life-long process. Contrary to the title of this column, one "talk" can not encompass the full financial meaning and values you wish to instill in your children. Like all elements of education, financial lessons are best tailored to the individual child's age, maturity level, and personality.

Christina Ubl, CFP® CDFA™ of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm and registered investment advisor that provides strategic financial and investment planning for individuals and small businesses in the Lake Champlain Valley region. Clute Wealth Management and LPL are separate entities. Securities offered through LPL Financial. Member FINRA/SIPC. The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations. For a list of states in which we are registered to do business, please visit www.clutewealthmanagement.com .