The Most Important Service Financial Professionals Can Offer Clients Is Helping Them Educate Their Children About Money!

According to a recent study, 61% of affluent parents with financially-dependent adult children rated “advice to help children become more financially savvy” as their top priority.  And 52% of adults planning retirement share this concern as well.¹

Eileen and Jon Gallo have spent more than 20 years helping financial professionals and their clients navigate the complex issues of family wealth. 

Through their books, seminars and media appearances, the Gallos provide tools to help affluent parents raise financially intelligent children.

¹ The New Retirement Mindscape, Ameriprise Financial in conjunction with Harris Interactive, Inc.January 2006

Talking To Children About The Current Financial Crisis

Our children are anxious.  Really anxious.  According to an article in the American Psychological Association’s Journal of Personality and Social Psychology a few years ago, the typical American child is more anxious today than children in the 1950s who were psychiatric patients!   And now our children have something new to be anxious about.   Children under 18 who never experienced anything but life in a rising economy are living through the worst financial crisis since the Depression. 

By the end of this year, most classrooms will have at least one child whose home is in foreclosure or whose father or mother has been laid off from work.  If you are one of those parents, what do you say to your children?   And if you are not, what do you say when your fifth grader wants to know if he is going to have to move like his friend who is losing his home or your 16 year old wants to know if she will be able to go to college?

The American Psychological Association’s anxiety study has an important insight for us when it comes to talking to our kids about the financial crisis.  The biggest factor in fueling our children’s anxiety over economic issues is the messages they get from their parents.   As parents, we need to be able to respond to our children’s anxiety with understanding and love.  But worries over the economic crisis are leaving both kids and parents increasingly unable to cope.   Today, newspapers are filled with articles about how children are reacting with fear, disbelief and anger when told about their family’s need to cut back. 

Here are four simple nuts and bolts suggestions for parents and financial advisors about talking to kids about the financial crisis.

1.              Be honest, calm and reassuring.  Explain what is happening in simple terms and don’t overload the kids with too much information.  Let them know how the family may be affected.  “This Christmas, we’re all going to have to ask for less stuff.”  And remember the old saying “little pitchers have big ears”.  Our kids take literally what we say, so stay away from comments like “We’re losing everything” or “This is a disaster.”

2.              Communicate; don’t lecture.  Listen to your children.  Find out what is worrying them.  They are going to pick up information – and misinformation – about the crisis from the media and their peers.   And reassure your children that they are not going to lose some of the things that are important to them, whether it is their favorite teddy bear, iPod or laptop. 

3.              Enlist your kids in becoming part of the solution.  Ask them for ideas on how the family can save money.  And convert some of those ideas into family rituals, whether it is clipping coupons together around the dinner table or decorating pancakes.   A friend whose father lost his job when she was eight years old still remembers that one of the ways the family saved money was by having pancakes for dinner once a week and the kids got to decorate them with fruit and sparkles.

4.              Help your children keep the crisis in perspective.  No matter how badly the economy is affecting your family, there are others hurting even more.  Psychiatrist Karl Menninger was once asked what advice he would give a person experiencing heavy emotional stress.   His reply was “find someone in need and do something to help that person. “   One of life’s most meaningful concepts for our children to learn is that we help ourselves when we help others.