Oftentimes when a person inherits money, they are not prepared to handle this new increase in wealth. Fox Business recently published an article about the importance of instilling positive money habits in children at a young age. They say that the first step is to determine whether your child is a “spender, saver, or a giver” by discussing money values with them. This will help to create the proper monetary goals that best fit their traits. The next step is to help them create goals and allow them to make mistakes. At a young age you can start with something simple such as “saving a portion of allowance or gift money, giving a piece to charity, and having the freedom to spend the remainder.” Giving them the opportunity to make mistakes during this process is encourages because it will allow them to practice and learn how to make better financial decisions for the future. As they get older you should grant them more responsibility within their goals. For example, you can “give them a budget to purchase school clothes, help plan a family vacation, or be in charge of adopting a family for the holidays and organizing gifts to be purchased.” These steps will help to instill positive money habits in early in life so that your children will be better prepared to handle their finances in the future, especially if an inheritance is passed down to them.
To read the full article from Fox Business please visit: http://www.foxbusiness.com/personal-finance/2013/03/01/inheritance-101-how-to-pass-on-financial-wisdom/