Sharing Values
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Passing on financial wisdom and lessons to younger generations.

Many parents and grandparents care as much about leaving behind their financial wisdom as they do their money or personal belongings. This desire may be well-founded: A 2012 study by Ohio State University’s Center for Human Resource Research found that the average adult who receives an inheritance saves just half of it.1

At the same time, older generations often prefer to convey their beliefs about money in a loving, yet non-domineering way. If you’re not talking to your children or grandchildren about values — what your financial beliefs are — when they’re young and impressionable, those values could be lost on them when they’re adults. Use these tips for how senior family members can better impart their financial views:

Initiate Discussions and Tell Stories

One of the most important elements is communication. Ongoing, open discussions about values are crucial to imparting them. Of course, these conversations should be tailored to the children’s or grandchildren’s age. These conversations don’t mean that parents or grandparents need to disclose their net worth or how much they plan to leave to heirs. In fact, it can be more powerful to talk about values and insights without discussing expected bequests or estate plans. One particularly effective way to convey financial values is by sharing personal stories. These might include talking about first jobs, building the family business or managing money as a married couple. Stories are one way to express insights and experiences in a way that is both memorable and appreciated.

Guide by Example

Most adults are well aware that actions speak louder than words. This axiom holds true with financial management. Often, the most effective way to nurture such qualities as responsibility, industriousness and generosity is by demonstrating them. If an affluent individual wants to instill an appreciation for living within one’s means and limiting debt, it helps if he or she does so.

When parents and grandparents take this approach, their offspring are likely to emulate them. To be sure, some children might be tempted to splurge for a while. But if they’ve seen how solid financial values can pay off over time, this tendency is usually temporary. 

Make Financial Planning a Family Affair

Involving children and young adults in financial decisions at appropriate times helps prepare them to eventually make intelligent choices on their own. Preserving a family’s wealth often requires more than providing information centered solely on portfolio management or tax strategies. It also entails instilling in the next generation a respect for the values that helped build their wealth in the first place.

Create an Ethical Will

Unlike a "last will and testament," an ethical will isn’t a legally binding document. It’s a letter — ranging anywhere from half a page to many pages — or a video recording that can accompany a will meant to convey values, hopes and dreams that someone wants to pass along to family members. Many ethical wills are shared while the creator is alive.

Although they’re not legal documents, ethical wills can be a heartfelt way to convey the feelings behind the financial decisions an individual is making. For instance, if an individual is planning to restrict the transfer of assets to younger family members over a specific time period, an ethical will can let him or her explain the reasons for this strategy. This may alleviate concerns that younger family members aren’t trusted or seen as competent financial managers.

Your Regions Wealth Advisor can help you have effective and informative conversations with younger family members about financial values. Your Wealth Advisor can also meet with them to discuss their own financial goals and planning.

1. Zagorsky, Jay, "Do People Save or Spend Their Inheritances?"Journal of Family and Economic Issues, 2012.
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