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Perspective NewsletterMost people love their children, and would do anything for them. This love sets up one of the greatest paradoxes of family wealth: Many parents work day in and day out to amass wealth for their children and grandchildren, and at the same time they fear that their financial success will ruin their families.

And it is true. Money can stunt children’s sense of perspective, independence, and life direction, causing both entitlements about and dependence upon family wealth. It can also impede them in developing the emotional skills needed to live a healthy, independent life.

It’s no wonder we are often asked by clients: “How do we give our children (of all ages!) the benefits and opportunities associated with wealth, and at the same time ensure they are responsible, grounded and others-oriented?” Or more poignantly: “How do we ensure money does not mess up our kids’ lives?”

In my recent book Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask (co-authored with Keith Whitaker) there are more than seven chapters related to Raising the Rising Generation. There are no simple answers, but three of the key success factors seem to be: (1) an intentional focus on values, (2) developing skills and experience, and (3) providing the right mix of independence and support.


Parents can proactively teach their children good life values. For younger children and grandchildren, you can create traditions and habits to teach core money lessons, such as labelling three jars—saving, spending, and giving—to encourage thoughtful choices, delayed gratification, and generosity.

But it is also important to remember that values are mostly caught, not taught. Your children will pick up more from seeing the choices you make about how you spend your time and money than they will from what you say.

If you want them to end up with good values, you need to live those values yourself. As respected psychologist and author Dr. Kelly Crace put it: “If I followed you around for 3 weeks, I could tell you exactly what your top 5 values are.”

Skills and Experience

Children need to be taught money skills, but they also need to learn from their own experience, including making mistakes. This is particularly important for teens and young adults.

This might mean opening up their own investment account, or encouraging them to take a course about money (e.g. Family Wealth Management, Rotman School of Management). You could also give them a small philanthropic budget, take them on a service trip, or help them figure out how they might save for an important purchase—and consider matching whatever they can earn.

If a college student uses up their spending budget halfway through the month, letting them do without for the rest of the month can help teach them budgeting, self-discipline, and planning—all of which are important life skills. It’s important not to parent with your wallet. Money and time can solve most problems; but money can solve them too quickly. Many families use money (and influence) to allow kids to avoid natural consequences, but those consequences are what allows them to develop the emotional and practical skills they need to live a healthy life.

Independence and Support

American journalist and author Hodding Carter once said: “There are only two lasting bequests we can give our children. One is roots and the other is wings.”

Children need the roots that come from clear boundaries, strong values and love. But as children develop into adults, they need to differentiate. They need ‘wings’ – the space and encouragement to chart their own course. Significant resources can stunt this growth, by acting as a shelter from consequences, offering undeserved opportunity, and fostering dependence.

It’s also helpful to remember that growing up with financially successful (or powerful) parents or grandparents can cast a shadow on the rising generation. It can be paralyzing and may feel impossible for them to live up to that standard. For this reason, it’s important to foster and celebrate each child’s interests and dreams, no matter what they are.

When it comes to discussing the size of the family wealth, each family is different. But in general we find that it is often better to wait until children have begun establishing their own lives and careers before getting into the details. Many families use significant life milestones — when a large lump sum can really help — as logical moments to share some of the wealth with the next generation, or match their own contributions. Examples could include university attendance, marriage, buying a home, having children, or starting a business.

Issues related to children and money are relevant for all families, at all levels of the economic spectrum, yet wealth seems to be an amplifier of all things – good and bad. Wealth can bring with it a sort of gravitational pull that is powerful and frequently distracting. If not properly managed, the very resources that should help a family flourish, can lead to its undoing.

The ideas and concepts in this article came from Wealth of Wisdom, my recent book with Keith Whitaker. The chapters by Thayer Willis, Ellen Perry, Jill Shipley, Scott Hayman, and Dirk Junge all provided source material.

There is much more on this topic (and others) to be found in Wealth of Wisdom, and the 45 episodes of the Wealth of Wisdom podcast series. You can find both at


Northwood Family Office

Tom McCullough

Tom McCullough is Chairman and CEO of Northwood Family Office, which looks after the investments and integrated financial affairs of wealthy families with $10 million or more. He teaches ‘The Management of Private Wealth’ in the MBA program at the University of Toronto’s Rotman School of Management, and is also co-author of the books, Family Wealth Management and Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask.

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