Financial Planners, Teach Your Children Well: What Would Arlene Say?

Someone recently mentioned in passing that, as a financial planner, they’re endlessly surprised by what a huge impact they have on their kids’ money mindset.

It really got me thinking—they are so right.

I often spend time gushing over just how incredible I think financial planners are. I’ve been known to call them super heroes without capes, and that’s because I believe it. Financial planners are changing the world, one family at a time—and it’s amazing.

But today I want to challenge you to look beyond your clients. Let’s examine how your knowledge base as a financial planner impacts the kids around you, whether they’re your clients’ kids, or your own.

The Trickle-Down Effect

The Trickle-Down Theory has often been applied to economics. The idea states that financial benefits given to big businesses will in turn pass down to smaller businesses and consumers.

I don’t want to get into the logistics or argue the validity of that theory. Instead, I want to take it and apply it to your knowledge as a financial planner. That’s right—your knowledge as a self-certified finance nerd is going to trickle down to impact the next generation (and the generation after that). 

Kids are sponges. They absorb (nearly) every ounce of information that’s thrown at them. Everyone is born with a blank slate. We don’t develop our money mindset, for better or worse, until we start absorbing how the adults we know and trust interact with money.

In other words, the bad money habits your clients have are beyond a shadow of a doubt being passed down to their children.

And what’s even more daunting? Your bad money habits or negative mindset about your personal finances are being passed to your kids and the other kids in your life.

As a financial planner, you have the power to reverse this unfortunate cycle.

Through education, encouraging curiosity, and being open to conversation, we can all turn the tide and kick the age-old “money taboo” that’s still alive and well in our culture to the curb.

Let’s start with how you can make changes in your home.

Teaching Your Children Well

The best place for you to start working with the kids in your life on positive financial habits, or a better money mindset, is inside your own family.

If you can figure out how to talk to your kids about money, think of how much easier it will be to turn to your clients and guide them through some of these conversations with their children.

Of course, there’s no “perfect” way of doing this. Everyone’s kids are different, with different money histories and different communication styles.

And guess what? You’re going to make mistakes. I certainly have—we all do! The perfect parent doesn’t exist, and neither does the perfect curriculum to teach your kids to view and treat money in a healthy way.

As the old saying goes: if at first you don’t succeed, try, try again.

Start Young

Start talking to your kids about money when they’re young.

If you wait until they’re in high school to explain that you’re up to your eyeballs in debt, or that grandpa’s bad habit of shopping mini figurines on HSN until 3am is costing him (and grandma) a comfortable retirement, you’re way too late to the party.

According to this fantastic article from PBS, money habits are generally set by age 7.

Age 7!

Can we just stop and appreciate that for a second. Your little 1st or 2nd grader is running around with a fully formed idea about money and how they want to approach it in their own lives. That’s both terrifying and incredibly exciting.

Your kids see and hear everything you do or say about money. Every time you bite your lip thinking about how to make holiday gifts happen, celebrate paying off a student loan, or feel angry about messing up your budget for the upteenth time, they hear you. They see you. And they’re learning.

This means that now is the time to start talking about allowances, your personal money philosophy, the importance of charitable giving, and saving and staying out of debt—keep talking about it!

Be an Example

With this in mind, it’s so important that as a parent and a financial planner, you work to be an example for healthy money habits. This goes way beyond just sticking to your grocery budget or modelling consistent saving.

It means that, from the moment you become a parent, you need to start approaching money without shame or guilt.

That means there’s no shame or guilt over past financial mistakes, and none over future money “wins” that often are guilt-ridden. Making money through hard work at your practice, or spending money on a lifestyle that makes you happy, all need to be modelled without shame.

Get Honest About Your Feelings

Your kids pick up on so much more than just what you say about money. You can talk all you want about the importance of budgeting, and how money is just a tool, but if your actions and emotions aren’t in sync with what you say, you can bet your bottom dollar that your kids will know.

So, when you can, keep your emotions about money in check. Or, better yet, hold open and honest conversations about how you feel about money and your family’s personal finances.

Sharing your mistakes, expressing frustration or embarrassment or even guilt, and talking about decisions that are a struggle are all great ways to model that having emotions about money is okay and normal. It’s also wise to encourage your kids to express how they’re feeling about money (in an age-appropriate way).

Are they worried about the suddenly tighter budget now that you’ve struck out on your own to start your RIA? Are they feeling guilty about receiving gifts on holidays or birthdays? Explore these feelings with them without judgement, and without telling them they’re wrong to feel these things. More importantly, help them determine why they feel the way they’re feeling.

For example, maybe they feel guilty about receiving gifts because they overheard you talking about how money was a little tight right now with your partner after you thought they’d gone to sleep.

Or maybe they’re worried about the tighter budget because their best friend’s family also is on a tight budget due to one partner’s job loss. Helping them understand why they feel fosters a healthy money mindset from a young age.

Ditch the Taboo

I can’t tell you how many parents I know won’t talk to their kids about money, and I won’t lie, it stresses me out. I definitely don’t hold the keys to the kingdom when it comes to parenting but hiding money habits or stresses from your kids feels icky.

Instead, I encourage you to have open discussions that get rid of the financial taboo that still looms in American culture. Walk through decisions together, share stories about learning from your financial mistakes, and ask them what they think. Be open, and you’re teaching them that openness about money is safe and healthy.

One of my favorite ways to start these taboo-banishing discussions is really simple: talk about money at the dinner table. Talk about what family money decisions are coming up, and let your kids play a small part in the decision-making. 

Letting your kids help make family decisions reinforces that it’s okay to talk through money decisions as a unit, and helps them to see that there may not be a “wrong” answer—just different consequences for every financial action.

Understand Long-Term Impacts

This is something that everyone misses, or maybe we just don’t want it to be true: what our kids learn from us when they’re young impacts their lives as adults.

This is true for finance-related stuff, as well. I’m still shocked when I dig deeper into my own money hang-ups and find a conversation I remember having with my parents as a kid glaring back at me.

If you’re struggling to find motivation to talk to your kids about money, remember that you can either have a positive or a negative long-term impact on their financial lives. That’s an easy choice to make!

Managing Yourself

It may not be easy to be a good money example for your kids, but you know what’s even more difficult? Managing yourself when it comes to money, especially as your kids get older.

Because money can be such an emotional (and integral!) part of our lives, it’s tough to keep a balanced perspective when talking about money with your kids.

This feels particularly true as our kids get older. As the proud mom of three adult children, all fully functioning (and awesome) members in society, I can definitely attest to this. I’m still learning about how to approach money with adult kids, and I can tell you that it’s a bit like trial by fire. Here’s what I’ve come up with on my journey so far.

Keep Things Age Appropriate

This seems like a relatively easy rule to keep in mind when your kids are little. A 5-year-old doesn’t have the same emotional capacity to handle high-impact money conversations as an 18-year-old.

Still, there are so many different versions of “adult”, and it’s tough to know what’s shareable and what’s not appropriate. 

It’s tempting to say that once your kid is in college, they’re an adult, and you can be as open and free as you want. For most money conversations, I’d say that’s probably accurate. However, I have one BIG exception: It’s not always okay to talk to your young adult (or even adult) children about why they should adopt YOUR money baggage.

I know —ouch. We want our kids to pick up on all of our positive habits and ignore all of our negative ones. But, too often, we carry emotional baggage about money that has a healthy result but is rooted in something unhealthy. A big example I run into when talking to my colleagues is spending.

When we’re afraid to spend, and live an uncomfortably frugal lifestyle, it can be easy to paint that same expectation onto our kids. And if they don’t have that same unhealthy root fear of overspending, or going broke, we might fall into a judgement-trap when we see them spend their money.

Manage Your Own Expectations

Speaking of expectations, let’s talk about them for a minute. Like I said before, I’m a mom of three adults, and I can confidently say that all parents make this mistake at least once. So, here it goes.

Raise your hand if you’ve ever expected your kid to do things the same way you did as a young adult.

Every single parent of a young (or old) adult should have a hand in the air. It’s so hard to break this habit! But it’s super important that we all remember that times have dramatically changed.

I was talking to a friend of my mom’s recently who said she paid her way through college by working summers at a local YMCA camp. Paid her way. Through college. By working three months a year.

What were they paying her? Tens of thousands of dollars each summer?

Times were different then.

The truth is, the relationship between cost of living and income from an average, part-time, college job has not remained the same as the years have gone on. This is just one example of different ways we might put expectations based on our experiences on our kids.

They’re dealing with a huge range of financial issues that we may or may not have had to deal with, from student loan debt to learning to leverage the gig economy. All we can do is support them and keep encouraging them to call on the positive financial habits they learned growing up.

Clients' Kids

Helping pass your financial wisdom on to your kids is a lifelong event. But you shouldn’t stop at teaching your kids how to handle financial conversations and decisions! You can also help to empower your clients to be a positive influence on their kids when it comes to developing a money mindset.

Young Children

If your clients have little ones running around, now’s the time for you to jump in and make a few recommendations. Obviously, telling a client how to parent is a no-go. That’s totally out of bounds.

However, I’ve seen a few of my clients and other financial planners I love come up with some really cool ways to support parents when it comes to enforcing positive money habits with their kids:

Offer up your favorite children’s books about money. So many advisors have a long list of personal finance books that they recommend to clients—try keeping a few on hand that are geared toward younger kids, too. A few of my favorites are:

• Lemonade in Winter: A Book about Two Kids Counting Money
• The Penny Pot
• A Smart Girl’s Guide: Money
• Alexander, Who Used to Be Rich Last Sunday 

Have a “kid friendly” budget printable at the ready. When you’re helping clients with cash flow, you can create a “light” version of the budget they’re following for their kids. I love this. It helps clients teach their kids about giving, saving, and spending with their allowance.

Offer to chat with their kids if they want them in on some of these conversations. Parents might feel more comfortable talking to their children about budgeting, or lifestyle changes they need to implement due to money mistakes they’ve been making, if you’re there to help them approach it without judgement.

There are a few other things you can do that are pretty awesome. This might mean contacting local elementary and middle schools that your kids attend about coming in and giving a talk on kid-friendly money topics (like saving or giving). You might even volunteer to help teach a mini personal finance course for middle or high schoolers at your local church or YMCA. Don’t be afraid to think outside of the box and give back to the community.

Adult Children

If your clients have adult children, the conversation obviously changes. Your #1 goal is no longer to help teach them about personal finance, but to help them understand that their parents are okay. This is especially true if you work with retirees. Their kids want to know that you—the financial planner—aren’t taking advantage of their parents.

Recently I heard someone explain that once a year (usually around the holidays), they try to take out their clients and their clients’ adult kids to a dinner to go over any questions they might have, give a review of their estate plan, and get to know one another.

It helps make sure that everyone’s on the same page, and lets their adult children know that not only are they taken care of, but that you can act as a point-of-contact should an emergency arise.

Keep the Big Message in Mind

The big message we have to keep in mind when working with our own kids, or our clients (and their kids), is that it’s safe to talk about money.

Whether you’re a financial planner, or just someone (like me!) who’s really plugged into the financial planning community, it’s so easy to forget that people don’t feel safe talking about money.

The hard truth is that discomfort bleeds out and makes the next generation feel equally unsafe when making money decisions for themselves and their families.

As a community, I think we’re responsible in part for turning this situation around. Helping your clients helps change the narrative for families everywhere. But we can level up our effort.

Between talking about money with our own kids in our own homes and taking the time to talk to clients and their kids about money, we can help spark a fire of change.

About Arlene Moss, Executive Coach

Arlene gets a kick out of helping financial advisors get over being overwhelmed and take on their frustrations so their businesses soar. Arlene works to ensure XYPN members are able to help their clients prosper while creating a sustainable business model. Through XYPN Academy and one-on-one coaching, members get the support they need to grow their businesses and overcome the challenges that come their way.