Financial Literacy Month: Empowering Clients to Discuss Money with their Children

April is Financial Literacy Month, and what better time for financial advisors to focus on a topic that impacts generations — how to talk about money with children? Financial advisors play a crucial role in a family’s financial well-being, which extends to their children’s financial education.

Did you know that 70% of wealthy families lose their wealth by the second generation, and nearly all (90%) lose it by the third? These numbers illustrate the critical need to establish early connections with your clients’ children, building deeper relationships centered around instilling responsible financial habits.

This blog post equips you, the financial advisor, with strategies to use Financial Literacy Month as a springboard to empower your clients to have open conversations about money with their kids.

Why Money Talks Matter

88% of all Americans said high school did not leave them “fully prepared” for handling money in the real world. This lack of financial literacy education creates stress and burdens families nationwide. Since schools may not fill this gap, parents must take charge and equip their children with the financial skills they need to thrive.

Talking about money can feel uncomfortable. Many parents are unsure where to start, what to say and how to tailor it to their child’s age. A University of Michigan study found that children as young as five already had distinct emotional reactions to spending and saving money and that these translated into actual, real-life spending behaviors. This shows that it’s never too early for your clients to start talking to their children about money and wealth.

Let’s not forget we are amidst the greatest wealth transfer in history. Over the next 25 years, an estimated $65 trillion in assets will change hands. Financial advisors have a unique opportunity to guide clients through meaningful conversations about the financial circumstances of their aging parents.

Tailoring the Talk to Age Groups

The right money topics can depend on the child’s age but should concern budgeting, debt, and other, more basic financial literacy topics.

• Preschoolers (ages 3-5): Focus on basic concepts like the difference between needs and wants. Introduce saving and spending with piggy banks.
• Elementary Schoolers (ages 6-10): Introduce budgeting with age-appropriate allowance systems. Discuss the concept of work and how money is earned.
• Teens (ages 11-18): Delve deeper into budgeting, saving for goals (like a car) and the importance of good credit. Discuss responsible credit card use and the dangers of debt.

Strategies for Financial Advisors

Financial advisors can play a key role in fostering financially literate future generations. Yet only 35% proactively discuss how clients can talk about money with their client’s children, while 71% of investors have never had this conversation with their advisor. There’s a clear disconnect. Here’s how advisors can bridge the gap and empower parents:

• Host a family financial education workshop: Offer a workshop during Financial Literacy Month where you guide families through age-appropriate conversations about money.
• Share financial literacy resources: Provide educational resources, such as articles, podcasts, videos, books and social media posts to provide additional insights and financial wellness tips.
• Have one-on-one client discussions: Integrate financial literacy discussions into regular client meetings. Ask parents about their comfort level when talking about money with their kids and offer guidance.

By taking an active role in Financial Literacy Month, you’re not just doing good — you’re becoming the go-to expert in your community. Educate your clients, lay the groundwork for their family’s financial success, and watch their children remember you when it’s time for them to start making smart financial decisions.