Money talks, sensibly

Even the youngest kids should be involved in family discussions about money.
NEW YORK -- Money is a part of everyday life, but very few people -- especially parents -- are comfortable talking about it.
Heidi Steiger, executive vice president of the wealth-management company Neuberger Berman, says avoiding financial discussions now will cause further headaches later.
Steiger edited the new book "Wealthy & amp; Wise: Secrets About Money" (John Wiley & amp; Sons). Much of the advice in the book, pooled from 22 financial professionals, focuses on money's place in a family and how it affects relationships.
Throughout her career, Steiger says she has seen many three-generation rags-to-riches stories. The grandparents think money will bring them happiness, she says, while the parents try to balance newfound wealth with traditional values, and the children often grow up to be irresponsible and helpless.
"Some people say, 'If I could only be so lucky to have this problem,' but I've seen money become corrosive," Steiger says.
Age-appropriate messages
Children are never too young to begin learning about money and family finances, says Steiger, although parents need to adjust the tone and direction of conversations depending on their children's ages. Children also should be taught about how money can contribute to but not control a "rich life."
"A 5-year-old might ask, 'Are we rich?' out of fear that someday her life as she knows it might end," Steiger explains.
Her suggestion for a response: A parent could explain that one or both of the adults in the family earn money at work, and that's what gives them the means to put food on the table and buy clothes.
As for the "rich" part, Steiger says it's important to instill in children that a rich life comes from a loving family and a giving spirit.
Talking things over
Steiger suggests holding regular family meetings to tackle all these issues. The targeted discussions provide a platform for all family members to weigh in on financial matters and to gain a better understanding of each other's perceptions, she explains.
"Parents will still make the decisions, but getting input from the kids is important. ... The meetings also can be a lesson in democracy if three out of four want to do something and the other doesn't, but everyone should be heard, and get their way sometimes, to encourage the dialogue," Steiger says.
These meetings can empower children and fuel their interest in financial planning if their own still-developing voice has a say in how the family earns, spends and saves money, she adds.
But try to tell a teenager that attendance is mandatory at a money meeting, and you're sure to get more grunts than a gung-ho "Let's do it."
Steiger suggests starting out with some less formal, open-themed discussions, which could touch on school, friends or any other subject near and dear to children that doesn't often get full family attention.
From there, these gatherings could turn into more formal and organized sessions.
When kids become adults
And these meetings shouldn't necessarily end once the kids become grown-ups and move out of the house -- they are still children, albeit adult ones, and they have an interest in family finances, Steiger notes.
One topic that is likely to come up periodically is the different payouts children receive.
Children tend to keep track of what is being spent on both themselves and their siblings, especially as they get older and develop different values and life goals, Steiger observes.
Two siblings, one who does more household chores by default because the other is busy every day with sports, might complain if they receive the same allowance. Steiger says this is when a parent needs to explain the difference between equitable -- a fair but not necessarily equal settlement -- and dollar-for-dollar equity.
The same discussion might happen years later when one child is married with two children to support and the other is single, and the parents decide to boost the inheritance amount to the larger family at the expense of the single child.
Unfortunately, says Steiger, there is no magic formula that solves these squabbles, but at least if the family talks about it there won't be any surprises. "You learn by trial and error."

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