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Raising kids amidst family business success
The next generation of family business owners is required to be many things. They are expected to be smart — even smarter than their talented entrepreneurial parents.
They also are expected to be financially fluent. Many will learn financial skills by accident and/or on their own, and this self-taught process tends to happen later in life. A family business parent can start now to ensure the next generation has all of the financial skills needed in order to be a good steward of the family business.
If you are a parent like me, you are probably thinking about how to raise good kids in today’s global, consumer-driven society. Add the dynamics of a family business or family foundation, and parents of next-generation owners may be doubly interested in teaching their kids to be financially savvy. I heard one mother worry about how she was going to train her 19-year-old son to eventually run a growing multi-national family business.
The goal is to start being a purposeful parent when it comes to raising financially responsible kids, no matter their current age. There are many books on the topic of raising financially literate children. One of my favorites is “Raising Financially Fit Kids” by Joline Godfrey, who walks the reader through age-appropriate activities in an organized manner.
Many of these books offer basically the same advice. Here are ideas for children ages 5-18:
Communicate your family’s money values. What are your family’s values around saving, giving, spending, borrowing and (I am adding this one) working? In many families, you save as much as you can, give around 10 percent of what you earn, spend no more than you make, and borrow only if you have to AND can pay it back.
I add “working” because families have different ideas about work. For instance, when a parent says to their children, “Do what you love”— implying “even if you don’t make any money” — their children may wonder if their parents will be financially supporting their passion. Another family work value may be “Work hard and bring home the bacon!”
Having these conversations about values can help your child make better decisions when faced each day with the many, often conflicting, money messages.
Understand your child’s money personality. Godfrey writes about the dominant money styles kids have; every child is different, and what works for one child may not work with another. Understanding your child’s money personality can help you custom design their financial training.
Is your child a Hoarder (doesn’t spend, has secret cash stashes), Spendthrift (can’t wait to spend), Scrimper (spends, but watches every penny), Giver (lends friends money, pays for meals), Beggar (always has a hand out), Hustler (“Deal” in every transaction), or Oblivious (“Whatever” approach to money). No dominant style is inherently bad, although each can have an extreme to watch out for.
Show your children it’s not magic. Credit cards and ATM cards may look like magical money tools, but we all know the danger of keeping kids in the dark. I saw a woman place her 2-year-old on the check-out counter of a well-known kids retail chain. As she and the cashier were chatting, her little cutie took her mom’s credit card and correctly swiped the card in the machine. Clearly, she had been watching her mom and at 2 was ready to become a pro!
What is a parent to do? First, start the credit conversation early: Talk to them about credit cards and how they work, credit scores, interest rates, etc.
An ATM card is also magic! You put the card in, punch a few buttons and out comes money! Help your kids understand how and why you have access to this money. One college student called her parent’s banker to ask why she wasn’t able to get any more money from the ATM. She had no idea there was a limit to the cash! There are many stories of kids going off to college with their “emergency-only” card and racking up thousands in debt.
Mind the marketing messages. There is a reason age-appropriate toys are placed at the child’s eye-level. Marketing companies of retail chains know kids have power over hassled, tired parents. Instead of arguing, parents often put the toy/candy bar/article of clothing in the cart and keep going.
There is no time like the present to talk to your kids about the many marketing messages they are facing each day. Between the commercials aimed at selling kids the latest gadget to the toys placed at eye-level, help your child become wise beyond their years and understand when they are being marketing to. Make it a game: Whoever can spot the most marketing messages wins!
Support your young entrepreneur. Get your young one to start thinking entrepreneurially. I recently went to a conference session on raising kids amidst success, and one attendee spoke about an activity he did with his 5-year-old daughter: Every new business idea she presented to him that would solve a viable problem, he gave her a quarter. The daughter started thinking of so many new ideas, she soon had a heavy book of quarters.
Locally, consider signing your teen up for GVSU’s week-long Teen Entrepreneurship Summer Academy, or TESA. “The program teaches high school students fundamental business concepts and essential entrepreneurship skills through hands-on, highly interactive, and creative workshops,” according to their marketing.
Are your kids in college? It’s not too late! Do what one CEO did. He asked his son to bring home his undergrad accounting textbooks and then had the family business CFO go through the books with his son to explain the connection between the college coursework and running the family business. Connecting the dots in this way will make an accounting course that much more meaningful.
It’s never too late to start not only your kid’s financial education, but also your own. Why not partner with your kids and learn together?
Mary Hunt, founder of Debt-Proof Living and author of “Raising Financially Confident Kids,” wrote about how she went from being severely in debt to financially savvy with the help of her husband and two boys. Her boys learned about money management alongside their parents. Today, the whole family is debt free.
Ellie Frey is the director of the Family Business Alliance, a West Michigan nonprofit tasked to help family businesses succeed generation to generation (fbagr.org). She is also the 3rd generation of her family’s foundation. For more information about Ellie’s journey raising fiscally responsible children, follow her blog at FamilyBusinessMoneyMama.com.