Wealthy parents with young children or teenagers have a big job to do. Teaching them the skills they will need to handle the money they will eventually receive requires commitment, thoughtfulness, and follow-through. In general, the biggest part of teaching rich kids is how to handle their money responsibly. In the next two or three months I will offer a few examples from my interviews with inheritors. These are true stories; the only change is the names of the inheritors I talked with—that is confidential.
How to foster generosity
Sebastian lives in a small city in New England. He and his wife spent considerable time dreaming up creative experiments to encourage generosity. Here is one: “My wife and I have a small family foundation, and we were always looking for ways to engage our children in our giving. One year, when they were fourteen, twelve, and nine, we gave each of them $200 in cash and said, ‘We’d like you to go out into the community and, in whatever way works for you, get this money out there. The only rule is that you have to tell the family what you did with your money.’ We made some suggestions, especially to the two older ones, Alex and David, because they were going to be on their own.
Alex went all over town. Just to give you an idea of some of the things he did: he left five dollars on a shelf in the library; he dropped five dollars off a highway bridge; he gave ten dollars to some homeless people; he dropped ten dollars on a soccer field; and he made a fifty-dollar donation to the Appalachian Trail Association.
Dan was more directed in his giving. As I recall, he gave the bulk of his money to one or two nonprofits.
Susy was only nine, so I went with her. She wanted to leave money at a playground, so we converted the bills into a lot of small change. Susy took the lead: we walked around the playground, trying to look nonchalant, dropping change all over the playground. And then we went off to the side and watched to see what would happen. The first thing we noticed was that a little boy was looking at us, and we realized that he probably saw we were up to something, but he didn’t know what. Then other kids started finding the money, and they were just delighted. And I engaged Susy in a conversation about the effects of what we’d done. There was the thrill of watching the kids find the money. We talked about anonynmity; having this kid watching us and then seeing how the other kids were finding the money brought up for her the issue of trying to be an invisible, or anonymous, donor, but getting caught.”
Excerpt from Coming into Money: Preparing Your Children for an Inheritance