As trusted financial planners, we take good care of our adult clients through holistic long-term financial planning while building strong relationships. In addition, many of us deliver added value by including our clients’ family members — especially children — in the conversation. This opens the possibility of building a long-term pipeline with our clients’ children, who could become our future clients. This also provides crucial education and drives awareness of the importance of financial planning.
A holistic financial plan should aid in promoting financial literacy to our clients’ children as well. With children, the goal is to create strong financial habits as they move through each life stage, categorized by the following age ranges: 4 to 8, 9 to 13, and 14 to when they earn their own income or leave the house. At each stage, it is all about age-appropriate systems and disciplines to instill better money practices with children. My saying is, it’s better to bend the little tree while you can in its young stages, before it is older and no longer pliable.
Use the Communication Vehicles Kids Already Use
There is no doubt that we all develop beliefs and attitudes toward money from observing the way our parents and peers use money. The problem is that much is changing in the industry, changing the ways we can access and plan our finances.
For example, technology can be used to our advantage. With smartphones and social media constantly accessible, we can guide our clients and their children with an app or web resources. These tools provide the opportunity for continuous open dialogue within the family, as well as strong money management habits formed over time. Using the communication vehicles that children are already using makes it easier to encourage the use of suggested resources, as opposed to lecturing.
When you do need to use reading material with children, make sure it is something with an overall story that will keep their attention, instead of purely educational content. I prefer to use YouTube clips that bring the message to the new generations. However, if the generation gap is simply too wide, then use a younger advisor as a resource to connect with the children; a younger advisor can suggest where to find the most interactive tools.
Long- and Short-Term Goal Setting
From a young age, use the children’s allowances as an opportunity to teach the benefits of budgeting and saving. In their own planning, let them keep track of details on each spend. This is especially important since children have debit cards these days and the real feel of money is frequently nonexistent.
Education with the whole family should include goal setting for special short- and long-term objectives. Through this, you can help your clients show the children what is possible if they were to save a portion of their allowance, or learn how their parents plan for the Disney World trip for the family in five years. Involve them in this discussion so they can see what needs to be sacrificed or controlled to make a dream family trip a possibility with savings.
There should be a monthly meeting with clients’ children to help them measure against the objectives they set. It’s also good to have pictures of the objective throughout the family’s house or the meeting place. This provides a visual to see what you’re saving for and keeps everyone in the family controlled on spending without always having to cut back on something. The goal is to show children how using money effectively can lead to achieving long- and short-term goals, whether it’s having enough money to pay for groceries or examining the “must haves” versus the “nice to haves.”
My professional organization, The Financial Planning Institute of South Africa, also has a “MyMoney123” program that we can use to educate our clients’ children and children in the community. Through this program, we provide piggy banks to teach children about saving. The program opens the opportunity for families to educate each other. We also have a “children’s day” at a friend’s house, where we present the program to multiple children at once. This gives parents the opportunity to connect.
Increase Involvement As Kids Get Older
As the children get older, have them join your annual review meetings with their parents and focus on simplistic ways to grow their knowledge. If you propose an element of the family’s plan that is related to the children, such as an education plan, get the kids involved. They can work out the calculations for you with an app or calculator, allowing them to learn more by way of involvement and seeing the direct impact it has on them and their parents.
Another fun way to boost children’s involvement is to get multiple family clients together and start an investors club. You would manage and host the club at a family’s house or at a local community center. This is a great way to build up an interactive group of adults and teach the basics of shares, bonds, asset classes, and buying and selling shares and units. Most of this can be done with virtual money through share platforms and apps as well. It must be fun, interesting and interactive, and may even include young speakers who come in and use technology to grab the children’s attention.
I really believe that teaching children about money should be a process rather than a one-time meeting. You should begin with education and awareness. You will bring added value to your clients and their children, and create so many other opportunities for yourself.
Kobus Kleyn, CFP, is a five-year MDRT member and director at Kainos Financial Services in South Africa. He is the author of Passion for the Profession — Mastering the 9 P’s to Professionalism. Kobus may be contacted at [email protected]