Multi-Unit Franchisee Magazine Issue II, 2011 | Page 88

investmentinsights
by Carol Clark

entitlement
De-Programs
Teach your children wisely

a

financial legacy can provide an incomparable
“leg up” to offspring—if they are adequately prepared. However, inelegant handling of the training
stage can create generations of enmity, or breed
unmotivated individuals with an entitlement attitude. A family business (especially if some offspring participate in dayto-day operations while others do not) presents even more
complexity, particularly in the area of “fairness.” Following
are a few things to think about as you grapple with starting
the preparation process.
• Unveil your own financial management beliefs—the
sooner the better. In the frenzied intersection of building a
business and raising a family, it can be overwhelming to take
time out to discuss the emotionally laden subject of “money”
with your heirs. Entrepreneurs are by their very nature used to
being in complete control and often reluctant to discuss details,
yet it doesn’t take a four-hour discussion of the family balance
sheet for you to open the dialogue. Start small, by teaching
key values such as “Spend less than you earn” and the importance of giving back to the community. Explain how you first
pay yourself by funding your retirement account off the top.
Explain how you use automatic payments to fund charitable
donations. Let them know that what comes in as “gross income” for the business isn’t play money, but is invested in plant,
equipment, advertising, etc., and pays taxes (which helps put
people to work, builds infrastructure, and fuels the economy).
• Delay talking about your financial balances. While it
is best to start demonstrating your money philosophy early,
most advisors agree that you should be very careful regarding how soon you reveal “real dollars.” Children understand
very early where they are in the social strata relative to their
peers. To the extent that privilege discourages children from
finding their own purpose and reason for being, it can be an
overwhelming burden and a disservice that lasts a lifetime.
According to many advisors, any significant amounts gifted
to a child before age 25 can seriously impede that child’s personal search for a meaningful livelihood. Some advisors recommend waiting until children are in their 40s or 50s before
giving them direct access to significant unearned wealth. Part
of the answer lies in what children are taught about the role
that money plays in their lives during their formative years.
Children must learn the responsibilities attendant to affluence, not just be left to revel in the privileges.
• Encourage your children to find their own passion
and purpose. In her book Children of Paradise, Lee Hausner

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Multi-unit Franchisee Is s ue II, 2011

repeatedly stresses the importance of giving children the
ability to develop wide-ranging competencies. For children
growing up in affluent households, this can be especially difficult. As Hausner puts it, “Many wealthy parents lead lives
that place them in strong supervisorial roles… Eliminating, or
significantly diminishing, this ‘take charge’ orientation when
parenting is not easy. But parents who assume the responsibility for making all the important decisions without input from
their