Discussions about money can often begin around the dinner table, with even very young children receiving pocket money in exchange for chores. This is the first lesson in money: it is exchanged for some form of service. The second lesson that follows is what you then do with that money.
Learning the value of money
Children also learn about money passively through the conversations that take place at home with their parents and sometimes extended family members. The family’s financial situation and their attitudes about spending, saving, borrowing, investing and donating are all learned from an early age just simply by hearing the discussions at home. When a family owns or operates a business together then these discussions will extend beyond personal finance matters, but topics relating to the business such as profit, tax, or distributions may also be learnt about from an early age.
When it’s the right time to learn about money and related matters it will vary from family to family. Having a positive understanding and attitude towards money is healthy for any individual to learn at any time to avoid negative personal financial situations, but for families in business this extends further when the stakeholders in your decisions around money impact others, such as the wider family members, employees, customers and suppliers.
Educating the Rising Generation
Introducing the Rising Generation to the family business can often start at the grass roots, such as sweeping the factory floor or packing shelves. Alternatively, where children have pursued their own pathway, and return to the family business, it may be in a specific role such as marketing or human resources. This may mean that a child is trained or educated in their particular discipline but may not understand the financial aspect of the business, its needs, and then the personal needs of the family that rely on the business profit or cashflow. Having good financial literacy – and in some cases formal training around these topics – will help not only the children in their personal lives, but to set them up for a potential future in taking over the management and ownership of the business.
Succession planning in a business must include components of financial literacy and learning about various topics like profit, tax, cashflow, loans, credit cards, investment and philanthropy as well as structures like companies, trusts and self-managed superannuation funds. The Rising Generation will have some knowledge and information, and in some cases some ‘bad’ habits or misinformation may need to be ‘unlearned’ to safeguard the business and family assets. Formal learning courses may be available such as tertiary education or courses, but there is also learning that will take place informally through the family or in the business.
Families that embrace the learning journey about money with their children from a young age will set their children up with skills to manage their own lives, but also to understand the family assets and wealth that they might inherit one day. Good succession and estate planning that can help a family retain the wealth it has created over time, but it also starts with educating the Rising Generation from an early age.
We’re here to help
It’s important to teach your children the value of money from a young age and seek some formal training to feel confident your family business will grow for generations to come.
Register your interest in our Rising Generation Financial Acumen course below and gain a better understanding of your business and family financials, options to find the business, and how to protect the family assets.
Learn more about how our Rising generation financial acumen training services can help you
