Chairman's Message: Kids and Money–Navigating the Opportunities and the Risks of Wealth

Kids and Money: Navigating the Opportunities and the Risks of Wealth

One of the most common topics on the minds of parents and grandparents these days is kids and money. At Northwood, we often have honest, animated, and insightful discussions on this topic. Our clients often come to us with thoughtful questions:

“How can I give my children the opportunities that wealth provides without making them entitled?”

“How much is too much?”

“When should we talk to them about the family’s wealth—and how?”

These questions are not new, but they seem more pressing now than ever. As families of wealth, we want to give our kids the best of everything. However, we also worry about protecting their initiative, work ethic, and values. We want to raise grounded, self-aware people—but we know that significant wealth can either support that goal or quietly (and sometimes not so quietly) undermine it.

I’ll share a few thoughts from these conversations and from my own family’s journey that I hope will be helpful to our readers. I’ve grouped them into three core ideas.

1. Money Is an Amplifier of All Things

Wealth magnifies what’s already present—both the good and the bad. In families, money can be a powerful enabler of education, creativity, opportunity, and generosity. But it can also distort perspective, blunt motivation, and stunt emotional development. Jay Hughes, a pioneer in this space, noted that 80% of trust beneficiaries view their trusts as a burden. That’s a sobering figure. Why? Because wealth, if not handled intentionally, can feel like a meteor, crashing into a life rather than lifting it up.

Many families want to be generous with their rising generations, but underestimate the long-term effects of this generosity. Entrepreneurs, for example, often built their success through struggle and perseverance. But their children, raised in comfort, may not face the same crucibles, and with that can come a loss of direction or purpose. We can’t—and shouldn’t—recreate unnecessary hardship for them. But we can create thoughtful conditions that encourage growth, responsibility, and independence.

2. Don’t Parent with Your Wallet

One of the most common patterns I’ve seen (and sometimes lived) is using money to smooth the road for our kids. It’s tempting. Money and influence can solve problems quickly—get them into a better school, pay off that credit card, cover rent when a job doesn’t work out. But when we solve every problem for our children, we rob them of the muscle-building that happens through natural consequences.

An example: Your son in college blows through his monthly spending budget in two weeks. You wire money instantly, instead of letting him do without for the rest of the month to learn budgeting, self-discipline, and delayed gratification. Short-term problem solved—but long-term lesson missed.

The most successful families we see at Northwood are the ones who encourage independence and delay financial assistance until it’s most impactful, often using a milestone approach. Help with the cost of education, a first car, a home down payment—but only when it aligns with maturity and effort. These moments, handled thoughtfully, help to build a strong foundation.

3. Invest as Much in Human Capital as in Financial Capital

Perhaps the most important shift families can make is flipping the traditional script. Most of us spend far more time preparing the money for the heirs than preparing the heirs for the money. It’s time to reverse that.

Preparing our kids to be good stewards of wealth means investing deeply in human capital—their skills, their confidence, and their values. It starts with understanding your own. As writer and family advisor Ellen Perry and others have emphasized, legacy is not just about money. It’s about character, stories, and the values we live by. What do you want your kids to remember you for—your resume accomplishments or your eulogy virtues? (For more on this subject, go read Ellen’s chapter in my book, Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask.)

It’s also important for us to live the values that we want to pass on to the next generation. As Dr. Kelly Crace says, “If I followed you around for three weeks, I could probably name your top five values”. But that doesn’t mean we shouldn’t also be intentional. Values should be discussed, reflected on, and modeled—especially when it comes to money.

Here are five takeaways I’ve seen work well for families:

• Write down your values and live them consistently—children notice more than we think.
• Explain your choices—why you donate, why you save, why you help others.
• Encourage responsibility early—allowances, chores, and consequences matter.
• Use storytelling—your life lessons, successes, and failures are powerful.
• Integrate values into wealth planning—ensure your estate and giving plans reflect what you care about.

A Framework for Intentional Wealth Transfer

In a great paper called, The Progenitor’s Dilemma by Baumoel, Trippe, and Spencer, the authors describe two key factors in wealth transfer

1. The rate of transfer—how fast, how much, and how often you give.
2. The quality of communication—how well your values, intentions, and expectations are conveyed to the people you’re gifting to.

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The goal is clear: predictable, high-quality communication. Families that create a thoughtful plan and explain why they are doing what they are doing, rather than keeping things mysterious or reactive—tend to raise children who feel respected, prepared, and empowered rather than confused or entitled.

Final Thoughts

Preparing the next generation for wealth—and for life—is one of the most important and complex challenges any family will face. And yet, very few have a coherent plan to accomplish their goals on this front. Most strategies are cobbled together over time, often driven more by instinct or fear than by intention.

But it doesn’t have to be that way. With the right tools, advisors, and conversations, families can turn their wealth into a positive force for the rising generation.

At Northwood Family Office, we are privileged to walk alongside families on this journey. Our goal is not just to manage financial capital, but to help strengthen the human capital that makes family wealth truly meaningful. The rising generation is watching. Let’s give them something worth inheriting—not just in dollars, but in values, wisdom, and love.

If you have thoughts, questions, or stories of your own on this topic, we’d love to hear from you. It’s a conversation we all benefit from continuing.