Broker Check

Practical Planning Tip: Mistakes Affluent Investors Make - Mistake # 7

May 24, 2024

Today’s mistake is Failure to teach your kids about money: Unfortunately, money doesn’t come with an instruction manual. If it did, there would be far fewer stories of families with generational levels of wealth who squander it all. One prominent example is the Vanderbilts, who were at one time the wealthiest family in America. Their fortune was gone within a few generations as the family spent all their money on expensive luxuries.

Ideally, an inheritance should empower future generations to create, build, and pursue their own goals. Achieving that result requires that children receive a solid fiscal education. Parents can teach their children, starting from a young age, through demonstration and being cognizant of how they speak about their finances in front of their children. Kids are very perceptive. Observing the way these conversations are handled at home will serve as the foundation for how they handle money in the future. As children enter adulthood, the focus should shift, and they should be actively included in discussions related to finances, investments, and philanthropy. Imparting the values, knowledge, and expectations of how your children should handle their inheritance is essential in cementing one’s own legacy. Over time they will form their own opinions and thoughts about how to handle their wealth responsibly.

I’ve noticed that the single characteristic that’s common to the wealthy people who succeed in business and also at managing their wealth is the ability to acknowledge what they don’t know. Taking the time to evaluate one’s limitations, and then surround oneself with the right team of tax, legal, and financial professionals, can help avoid many of the mistakes and misconceptions and mentioned int his video series. This approach will help position affluent investors to better preserve the wealth that they spent their lifetime creating.


You can WATCH the full video here.