{"id":55789,"date":"2025-01-27T11:20:05","date_gmt":"2025-01-27T11:20:05","guid":{"rendered":"https:\/\/innodebt.com\/?p=55789"},"modified":"2025-01-27T11:20:07","modified_gmt":"2025-01-27T11:20:07","slug":"how-when-and-why-to-talk-to-your-kids-about-your-money-timeless-wisdom-from-warren-buffett","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=55789","title":{"rendered":"How, When, And Why To Talk To Your Kids About Your Money: Timeless Wisdom From Warren Buffett"},"content":{"rendered":"
\n

Forget E. F. Hutton; when Warren Buffett talks, people listen. And I don\u2019t feel like that\u2019s simply because he\u2019s the world\u2019s most famous investor, though he is. He\u2019s a person of wisdom. A wisdom that seems to have been applied not only in his investing, but also in his marriage, his parenting, and his own personal finances.<\/p>\n

So when he recently offered his personal advice on estate planning\u2014on how, when, and why you should talk to your kids about your estate plans\u2014it certainly got my attention. And it offers a framework for all of us, regardless of our net worth.<\/p>\n

Buffett\u2019s Estate Planning Advice<\/h2>\n

\u201cWhen your children are mature,\u201d Buffett said, \u201chave them read your will before you sign it.\u201d So, the when is pretty clear\u2014when our children are mature and before our will is signed. But how?<\/p>\n

\u201cBe sure each child understands both the logic for your decisions and the responsibilities that they will encounter upon your death.\u201d Buffett\u2019s instructions on how also require another step here, because to explain the logic and the roles children play in our wills, we have to understand them. You need to know your plan well enough to explain it.<\/p>\n

<\/fbs-ad><\/p>\n

This wisdom can\u2014and should, I believe\u2014be applied in every aspect of our personal finances. I realize that there may be many intricate complexities of some financial strategies and vehicles that require the guidance of a professional. Yet, a great rule of thumb in personal finance is that you shouldn\u2019t enact a strategy that you can\u2019t explain to a 5th<\/sup> grader. (Thanks, Larry Swedroe.) And yes, that means if you currently have strategies in place that you don\u2019t understand, I recommend reaching out to your financial advisor to gain that understanding.<\/p>\n

But you\u2019re not likely to put this good advice to use without understanding why, and Buffett doesn\u2019t leave us hanging here. He says, \u201cYou don\u2019t want your children asking \u2018Why?\u2019 in respect to testamentary decisions when you are no longer able to respond.\u201d<\/p>\n

Indeed, it\u2019s hard enough for a family to navigate the loss of a loved one, and our estate plans are, quite literally, our last words to those we love the most. Too many estate plans\u2014either for lack of effective planning or lack of effective communication\u2014result in a last word that is mysterious or confusing, at best. And we can eliminate that confusion by discussing our plans before we\u2019re gone.<\/p>\n

Estate planning certainly isn\u2019t the first or only time we\u2019ll have an opportunity to discuss money with our children, so how can we apply this why, when, how framework in discussing money with our kids?<\/p>\n

Why?<\/h2>\n

First, let\u2019s retrace why we\u2019d discuss money with our children in the first place. Notably, Buffett comes from a generation for whom discussions of money, with just about anyone, were considered taboo. But is it not our chief responsibility as parents to raise our children to be independent and contributing members of society? How else will they learn how to grow, protect, give, and live, if not from us? (And no, despite an enormous effort to integrate financial literacy and wellness into our educational systems, we\u2019ve largely failed at changing our archaic approach to academia.)<\/p>\n

And here\u2019s the best why I\u2019ve ever heard for being willing and able to articulate your financial and life lessons to your children:<\/p>\n

We want to <\/em>get there first<\/em>.<\/em><\/p>\n

Whether the topic is sex, drugs, rock\u2019n\u2019roll, or money, we want to get there first as parents. We want to provide our children\u2019s foundational understanding of these most important issues before they come home from school or a friend\u2019s house having had their foundation poured by some kid with an opinionated older sibling.<\/p>\n

When?<\/h2>\n

So, we have to know our opinion before we can share it, but how do we know when<\/em> to share it?<\/p>\n

Buffett gave us two instructions here, one that is clear and one that is a bit more nuanced. First, he tells us to share\u2014in this case, our estate plans\u2014when our children are mature<\/em>. That, of course, will be a sliding scale for each child, parent, and topic.<\/p>\n

I can imagine that having your kids read your will falls later, if not last, on this inculcation timeline, if only because reading legalese is over the heads of most seasoned adults. Yet, learning how to spend, share, and save via three jars in the kitchen can come much earlier, followed by understanding credit and money in the digital domain, borrowing, taxes, insurance, and one of the most fertile fields for financial understanding\u2014education planning for your children.<\/p>\n

But how do we know when our kids are mature enough to handle these topics? When they demonstrate genuine curiosity.<\/p>\n

Yes, this means that it\u2019s not a planned schedule on the calendar of couch speeches. It requires a fluid approach and the ears to hear when our children express genuine curiosity. Even then, it may require unearthing the root question that really needs to be satisfied\u2014and choosing an age-appropriate answer.<\/p>\n

Now to the more nuanced point Buffett makes through his advice. He said, \u201cWhen your children are mature\u201d\u2014check\u2014\u201chave them read your will before you sign it.\u201d Before we sign it, Warren, but why?<\/p>\n

I surmise here that this is yet another opportunity to grow our kids up. By having them review our wills before we sign; by discussing our move before putting the sign in front of the house; by letting them know our role was downsized right before their junior year of college, putting the private school tuition out of range; by discussing the opportunity to buy a second home; by enlisting them as part owners (however small the percentage of ownership) in these decisions that certainly feel big for them, we are using these conversations as one more opportunity to add to our children\u2019s maturity resumes. And we are normalizing these weighty decisions when they are still under our care, better preparing them to make those decisions as adults.<\/p>\n

How?<\/h2>\n

But how?<\/p>\n

Let\u2019s use the classic example that has persisted through generations. Your teenage kid asks, \u201cHow much do you make?\u201d<\/p>\n

They\u2019ve expressed curiosity, but does that mean it\u2019s time to hand over your paystub? Probably not. Let\u2019s follow Simon Sinek\u2019s advice and \u201cstart with why.\u201d<\/p>\n

\u201cI appreciate your question, and I\u2019m wondering what sparked it. Why are you curious how much I make?\u201d<\/p>\n

You may have to ask a few questions to arrive at the motive, and that, combined with your intimate understanding of your child\u2019s maturity, will no doubt illuminate your final answer. And it\u2019s possible, if not likely, that your answer won\u2019t even include any numbers. Remember Buffett\u2019s advice here: \u201cBe sure each child understands both the logic for your decisions and the responsibilities that they will encounter\u2026\u201d<\/p>\n

In my experience, the younger our kids are, the more logic itself will suffice\u2014but as our children age and mature, it\u2019s altogether possible that actual numbers will be beneficial, if not necessary. After all, especially as it relates to the subject that was our launching point, estate planning, our kids will eventually find out what the numbers are. Therefore, in lieu of making it a total surprise, shrouded in mystery, why not discuss it now\u2014invite them into the discussion, teach them the logic behind your decisions, enlist them in the implementation of your plans, and help them learn how to make life\u2019s most important decisions with competence and confidence.<\/p>\n

So, I\u2019m curious: do you feel better prepared to have your next meaningful money conversation with your kids, regardless of their age?<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Forget E. F. Hutton; when Warren Buffett talks, people listen. And I don\u2019t feel like that\u2019s simply because he\u2019s the world\u2019s most famous investor, though he is. He\u2019s a person of wisdom. A wisdom that seems to have been applied not only in his investing, but also in his marriage, his parenting, and his own […]<\/p>\n","protected":false},"author":1,"featured_media":55790,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[24],"tags":[],"class_list":{"0":"post-55789","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance"},"yoast_head":"\nHow, When, And Why To Talk To Your Kids About Your Money: Timeless Wisdom From Warren Buffett | Innodebt<\/title>\n<meta name=\"description\" content=\"Forget E. F. Hutton; when Warren Buffett talks, people listen. 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