Teaching physicians' children good financial skills

August 24, 2015

One of the hardest topics to discuss with our children is money. Physicians are no different. Here's how you should approach the subject.

One of the hardest topics to discuss with our children is money. Many parents do not discuss money with their children, often because they were never taught good financial principles themselves.  Good financial behavior is not routinely taught at the high school or college level, leaving us to learn on our own, many times the hard way.

Physicians, your children are depending on you to help them learn the basics.  Otherwise, they are left to the financial world to teach them, whose financial interests are not always aligned with theirs.

I think the most important thing you can do for our children is to model good behavior. From an early age, your children are watching you and how you handle situations. They hear and observe much more than we realize. Children observe how you and your spouse (or ex-spouse, if you are divorced) discuss money. They learn what money means to you by how you communicate about it, and what you value by what you spend money on.

Related:Balancing today's spending against saving for tomorrow

So, to start, what are your values? Write them down. Is the way you spend your money and time consistent with those values?  Given the time pressures we face in our careers, it is natural to find some areas for improvement.  Having awareness and being intentional about what you desire to pass on to your children is most of the battle in helping them to have a healthy relationship with money. 

In addition to modeling good behavior, a trait consistent with having a healthy relationship with money is the importance of giving.  In a January/February 2012 article in Harvard Business Review titled, "The Science Behind the Smile," Harvard psychology professor Daniel Gilbert was asked about the little things we can do to increase our happiness. He notes, "They won't surprise you any more than 'eat less and exercise more' does. The main things are to commit to some simple behaviors - meditating, exercising, getting enough sleep - and to practice altruism. One of the most selfish things you can do is help others."

 

NEXT: "A clear understanding of your values"

 

No matter which angle you look at this from, it is clear there is something innate in humans that gives us gratification from serving others. For teaching our children about giving, Eileen and Jon Gallo in "Silver Spoon Kids" recommend several things to think about:

  • Make it as experiential as possible.

  • Make it an activity that can be shared with the entire family.

  • Don't limit it just to writing checks; hands-on experience also is important.

  • Share with your children what you do and why you do it. They probably do not know. Get their thoughts on organizations or causes they would like to support. Ideally, find something your child is interested in.

One idea is to ask your financial advisor or accountant to add how to teach your children about money to your next meeting agenda. "Silver Spoon Kids" is a great resource for this. There are many age-appropriate topics to consider, from how and when to give an allowance, to teaching delayed gratification, the importance of compounding interest, and how to budget, among others.

At the core of any discussion is a clear understanding of your values. As you see the tail lights of your child driving off to college, what do you want to know is embedded in their heart? This just does not happen, so start today with a strategic plan for your children.

Bill Cleveland, MBA, CPA, CFP®, is a partner and senior advisor for Preston & Cleveland Wealth Management, LLC, with four offices in the southern U.S. Cleveland is a fee-only CFP and a member of the National Association of Personal Financial Advisors (NAPFA), providing comprehensive financial planning and investment management services to individuals and retirement plans across the country. He can be contacted at bwc@preston-cleveland.com.