As a successful family business owner, being able to provide the very best for your children is a real privilege, especially if you yourself have overcome humble beginnings. Unfortunately, privileged children may not see it that way – having never experienced a lack, it can be hard for them to appreciate abundance, nor the hard work which goes into attaining it!

However, it’s not inevitable that your children or grandchildren grow into selfish, spoiled adults. Here’s how you can ensure that the next generation develop into well-rounded and responsible adults who understand the value of money…

Talk to them about money

Many people shy away from talking about family money, but talk about it you must if you wish to raise financially astute and money-wise children. Don’t be afraid to start these conversations early; just be sure to make your talks age-appropriate.

Discuss questions like:

• What does it mean to be wealthy?
• Where does our money come from?
• Why does our family have more than enough money for our needs, while some families struggle?
• How should we spend our money and when should we save it?
• Should we give some of our money away to help other people have a better life?

Teach them to manage money

Money doesn’t grow on trees, as the old adage goes. Help children understand that money is a finite resource by:

• Giving them a weekly or monthly allowance for them to manage – and don’t give them more if they overspend their budget
• Showing little ones how depositing their allowance in a piggy bank accumulates funds
• Helping older children open and manage a current and savings account.

Take them through the family constitution

A family constitution is a statement of principles which outline the family’s commitment to the core values, vision and mission of the family business. Along with defining processes and procedures relating to the running of the business, a family constitution often sets out the family’s views on wealth, as well as philanthropy and the nature of their charitable activities.

Invite younger members of the family to family council meetings and provide opportunities to discuss the family constitution and the family’s attitude to managing and preserving its wealth, and how that wealth can be used for the greater good.

Get them involved in philanthropic activities

Philanthropy is the desire to promote the welfare of others, especially though charitable donations. Getting children to think about others’ welfare is a great way to highlight their own life of privilege. It also gets them thinking about ways in which they can use their money, time or reputation to help those in need, thereby developing compassion and responsibility.

You can get the younger generation involved in the family’s charitable activities in the following ways:

• Take them along to see the work your charity is doing, so that they can experience it first hand
• Get them to roll up their sleeves and volunteer at one of the projects you support
• Ask them to donate a portion of their allowance to that project
• Ask them for their ideas on how the family can better their charitable actions, or raise more money.

Make philanthropy a personal practice

While you may, understandably, want to encourage the younger generation to participate in one or more causes to which the family has a long-standing association (to ensure the continuation of your own philanthropic goals), you can make philanthropy a more personal and engaging experience for a child, teenager or young adult by getting them to establish their own philanthropic fund.

Here’s how:

• Ask them to scour the media and make a list of worthy causes about which they feel strongly
• Get them to select one cause close to their heart
• Ask them to do a presentation in which they present the case for their chosen cause
• Offer to match donations they make from their personal allowance or money they raise from other sources.

 

This article was authored by Christophe Bernard of KPMG Family Business (ww.kpmgfamilybusiness.com)