Children are not sent out on to the sporting field to compete without considerable training and preparation; they are not expected to perform in orchestras without training and practice; many will not get to do either of these things – but many more will be expected to perform well in the management of their financial resources: and at a high level of performance.
The lack of financial education within all systems in Australia (and not just in the formal primary/ secondary school curricula) is appalling – and we encourage parents from all financial backgrounds to take an active role in coaching their children in ‘the ways of money’.
There are many articles written – and a general community awareness that as Australians we are an aging population; and that the consequence of this is that over the next couple of decades significant wealth will transfer from ‘the baby boomers’ to subsequent generations.
Through carefully orchestrated estate planning, provision is being made by many families to ensure that the accumulated wealth is ultimately passed on ‘to the right people, in the right amounts and at the right time’: what is not so apparent, is that little is being done to educate the ultimate beneficiaries in the appropriate management and use of the transferred wealth.
‘Children set to inherit (significant) wealth as (young) adults need knowledge and experience to make decisions that inevitably accompany such an inheritance. Many parents find themselves worried as the moment of wealth transfer approaches for a child unprepared to manage (significant) assets, and regretful they did not provide the financial education their child needed.’1
In Joline Godfrey’s article (referenced below) from which the above paragraph has been extracted, the following list suggests the skills that we need to be able to pass on to (teach) our children:
TEN FINANCIAL SKILLS EVERY CHILD NEEDS - The basic skills every child needs to master by the age of 18 include:
- How to save
- how to keep track of money
- how to get paid what you’re worth
- how to spend wisely
- how to talk about money
- how to live on a budget
- how to invest
- how to exercise an entrepreneurial spirit
- how to handle credit – and
- how to use money ‘to change the world’.
If you are serious about the financial education of Australian families, a good place to start is whilst instigating professional estate planning strategies: follow them up with family meetings at which the ultimate recipients of the accumulated wealth are able to be briefed as to why the plan has been structured as it is – and to encourage preparation for a continuation of the wealth management plans that gave rise to the investment portfolio that will form the basis of the estate.These particular skills are more or less relevant depending on the relative financial position of different families: in all cases, the core of what is listed here is relevant and will stand your children in good stead if you can achieve them. [We encourage you to read the article in full and have provided the link to it below.]
[The genesis for the above article came from a post1 from the Northern Trust blogsite: Insights on… Children and Wealth - Preparing Children for a Life of Wealth, written by Joline Godfrey, CEO, Independent Means Inc. In acknowledging the source I trust that my interpretation has not detracted from the importance of her message – which I understand and support.]