Passing Financial Values to the Next Generation

Communication is key to introducing financial education and your core beliefs to your children. For example, when shopping with toddlers, you can teach them how to make sound financial decisions by explaining that they can't get everything they want because the money is needed for something else.

With school-age children, you can use their allowance as a learning experience by allocating a certain percentage to spending, saving, and giving. You can even pay them interest on their savings to teach them the benefits of delayed gratification and compound growth. Graham recalls his father carefully tracking investments in a notebook and discussing his approach with both boys.

If you expect your kids to work for their own money as teens and young adults, they need to understand that from an early age. "Derek and I were wartime Brits," Susan says. "For us, you had to not only earn money but also save money—always." It's an approach the couple instilled in their sons. "We had Graham get a paper route as a young boy to earn money for the things he was passionate about. If you're given that money on a silver platter, your level of commitment will never be the same," she says.

Self-conscious parents may hope older kids won't notice their family's wealth, and how much of your financial life you decide to share with them depends on the child and the situation. But in the age of social media, affluence can be difficult to disguise. If your child questions you about your wealth, you might start the conversation with questions like, "Where do you think our money comes from?" or "How can we use our resources for the wellbeing of others?"

Likewise, there are no hard-and-fast rules for when to start sharing your long-term goals as well as your estate and family legacy plans with your children—except you should do so while you're still alive. (See "Don't: Assume your estate plan is sufficient.") Discussing your wishes with loved ones—particularly around the distribution of assets—can not only help ensure a smooth transition of your wealth but may also minimize conflict and maybe even prevent potential lawsuits.

Derek and Susan invited both sons into their estate-planning conversations early on. "Roger and I have met with our parents' lawyer and know exactly what's in their wills," Graham says. "We also regularly sit in on meetings with their Schwab advisors so we're all on the same page."

If you intend to leave a tangible legacy—be it a business, a charitable trust, or even a foundation—you should similarly invite your heirs into the planning process by discussing, for example:

• What do we want to accomplish together?
• How can we serve future generations?
• What's your vision for the family business or for philanthropic giving?

For the Hines, ePlant's ongoing success is a priority, as is bequeathing additional resources to local land preservation efforts and other charities they support.

A collective family wealth mission statement can help, especially for those hoping to beat the odds and preserve their family's wealth for generations.

One way to pass along your personal values on money management is by talking with your family about the purpose of excess wealth—and then setting an example with your own financial habits.

The Hines focused less on possessions than on experiences, many of them involving activities like camping, hiking, and skiing. "Somehow or other, we always ended up outside," Susan says, which was consistent with her own upbringing in England. "When I was growing up, we didn't have the money to spend on going out, so we'd pack up the car and head to the woods or a lake." If fancy hotels and first-class airline tickets are your thing, that's perfectly fine—just be aware that if that's all your kids know, that's the lifestyle they are going to expect to maintain, no matter what you tell them.

"Leaving the bubble of wealth is essential," she advises. "Take them to places where they can be of help."

Susan volunteered extensively at Filoli Historic House & Garden in Woodside, California, particularly in the nature education program for kids, leading guided hikes and workshops. She recently dedicated time to help maintain the landscape and mitigate fire risk in her California community. She never pressured her sons to participate in her volunteer activities, but the example she set—and her and Derek's passion for the great outdoors—made an impression.

"We inherited our love of the land from them," Graham says.

Without prioritizing time together, it's hard to pass on your values to your kids. While Derek worked hard, he made sure to step away from work on weekends and vacations. "Despite the extreme demands early in his career, he always found time for the family," Graham says.

Several years ago, Derek began showing signs of dementia and voluntarily gave up flying his beloved experimental aircraft, but his influence endures. "I often see brilliant people who have gotten to where they are by working 60 or 70 hours a week," Alex says. "As financial planners, we can help reinforce the notion it's OK to step off the treadmill in favor of spending more time with family. There's a time to sow and a time to reap the rewards, and there's no greater reward than quality time with your kids and the impact that comes with it."