Your Family Money Values Matter: How to Get on the Same Page

A multigenerational family on a picnic in the fall.

(Image credit: Getty Images)

Have you ever thought about why you save, spend, gift or invest money the way you do? If not, you’re not alone — most people haven’t. Whether you’re aware of your monetary behaviors or not, your “why” is likely directly tied to your money values. These are a set of beliefs and principles that motivate your financial decisions, which can have a significant impact on your personal and familial financial success.

You may have heard of the “third-generation curse,” which indicates that most families lose their money by the third generation. This is likely due to a combined lack of financial education and awareness, shared values and overall money mismanagement. Therefore, establishing shared money values, being vocal about them and ensuring your heirs share them, can help safeguard your wealth for generations to come.

Because values are complex, defining and getting your entire family to abide by the same ones can feel challenging. I’ve seen this hold especially true when wealth is passed on to grown children with spouses who have different values, and/or grand and great-grandchildren who are further removed from the initial onset of wealth. As a financial adviser who often participates in family estate planning discussions, here are a few considerations to help get everyone on board:

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Identify your own money values

Many people aren’t consciously aware of their money values or financial habits. These are typically subconsciously shaped by one’s upbringing, personal experiences and beliefs. For example, if you grew up in a home where your parents were struggling to make ends meet, you may feel the need to be overly conservative with your funds based on fear that you won’t ever have enough. And while it’s certainly healthy to save and have enough set aside for potential emergencies, it could steer you away from taking calculated risks — such as investing a portion of your money — stopping you from benefiting from the power of compounding. On the flip side, if you were raised in a home where money was not a major source of stress and easily accessible, you may struggle more with overspending or delaying instant gratification.

These are certainly two extremes, but I call them out to emphasize that before you can actively define money values for your family, you must understand your habits and be intentional about making any necessary changes. You can’t change what you don’t know.

Get on the same page with your spouse

Parents will set the foundation for their children, so it’s important for spouses to be on the same page when it comes to family money values. However, I know all too well how difficult that can be, especially in the early years of being together. My husband and I had quite different upbringings, and therefore slightly contrasting, deep-rooted money values. I grew up feeling financially secure, and perhaps even a bit spoiled, while my husband’s experience was the opposite. It took some time to work through our unique perspectives and learn how to compromise to create a nice balance for our family, but it started with continuously having those hard conversations.

If you’re currently struggling to work through this with your own spouse, I encourage you to tap a professional. The beauty of turning to a financial adviser, particularly one with a fiduciary duty to act in your best interest, is you’ll get an unbiased, third-party perspective that considers your individual goals, helps you find a middle ground to establish family goals, and creates a personalized plan to reach them.

Instill money values in your children early on

Once you and your spouse are set, focus your attention on instilling these values in your children. Have conversations with them about what good money habits are — like the importance of saving, investing and gifting — and why they’re important. Then, encourage them to do these things in relevant ways as they mature. This could look like having them set up a lemonade stand to earn income in their early years or teaching delayed gratification when in the toy store.

My husband and I encouraged our 15-year-old to get a job so she could understand the lesson of working for the things you want. On the flipside, our 22-year-old college student is conscientiously saving a portion of his income into different investment accounts and budgeting his remaining funds to cover necessary expenses. Giving back is also a priority in our household, so we did a lot of family volunteering (gifting our time) and encouraged material gifting as well (via monetary or tangible donations).

Our children — and yours — will remember these experiences and mimic what they see, so set a good example.

Establish ongoing family discussions

Perhaps one of the most important things you can do when your beneficiaries are of age, is to have ongoing family meetings to talk about your family legacy. Here you can discuss how risky or conservative you want to be, which wealth strategies the family should prioritize, how assets will be divided when the time comes and what to do with these assets (i.e., give a portion to charity, cover education expenses, etc.). These conversations should happen often, and especially after life events such as when your child gets married or after you welcome a grandchild.

Remember, your heirs may want to do things differently than you, but that’s OK. We often portray familial units as a family tree, with everyone representing a different branch. Just like on a physical tree, the branches will differ from one another. The important thing is they all share the same root. However, if you find the values to be too contrasting to your own, you can take further precautions — like setting up a trust — to control the way your wealth is distributed.

A legacy is not a legacy without a shared vision and a plan. Good luck!

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Julie Virta, CFP®, CFA, CTFA is a senior financial adviser with Vanguard Personal Advisor Services. She specializes in creating customized investment and financial planning solutions for her clients and is particularly well-versed on comprehensive wealth management and legacy planning for multi-generational families. A Boston College graduate, Virta has over 25 years of industry experience and is a member of the CFA Society of Philadelphia and Boston College Alumni Association.