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The Importance of Teaching Financial Responsibility to Your Heirs

| June 08, 2015
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If you are worried about the future success of your children - and what parent isn't - teaching them financial responsibility is one of the best things you can do. The financial lessons you teach your heirs now will stay with them for a lifetime. If you do your job well, you will set your children up for a lifetime of financial success. If not, your offspring may struggle with financial problems all their lives.

The State of Financial Education

One of the reasons financial education is so important for the next generation is that most schools do not teach it. When you were young, you may have taken an economics course, or at least a lesson in how to balance a checkbook. These days, with schools under pressure to perform and all but the most basic classes excised from the school day, few schools have the resources or the expertise to teach their students even the most cursory lessons about their finances. If you have been waiting for your son or daughter's school to impart financial wisdom, it is time to stop waiting and start teaching those lessons yourself.

Start Simple

The financial lessons you teach do not have to formal or structured. In fact, your kids might learn more just from watching you and helping you deal with the family finances. If you have young children, take them with you the next time you go grocery shopping. Hand them a calculator (or a smartphone app) and let them add up the tab as you pile groceries into the cart.

This simple lesson in economics can be a powerful tool and a great life lesson in how the world works. At the very least, knowing how much the food they eat every day costs will instill a respect for money that can last a lifetime, and give them a frame of reference for the cost of goods.

Debt Safety Lessons

Teaching the next generation about the dangers of debt may be even more important. In this age of rampant college loan debt and lifelong repayment plans, it has never been more important for parents to be open and honest about their own debt experience and share their wisdom with their kids.

If you use credit cards, sit down with your older kids the next time the bill arrives. Go over the various parts of the statement, including the list of charges, the interest rate and any finance charges. There is nothing like a real-world example to bring home the dangers of excessive debt and the irresponsible use of credit cards.

Role Modeling

Talking to your kid and educating them about finances is important, but leading a better financial life yourself will do even more. Children learn by example, and they are watching you even when you do not know it. Leading by example by keeping a close watch on your credit score, paying down your debt and choosing wise investments will do more than any classroom education ever could.

Think for the Future

If you are already retired, talk to your kids (or grandchildren) about the hard work and dedication it took to exit the workforce early and enjoy the rest of your life. If you are still working, explain retirement plans like 401(k)s and IRAs to your children and show them how saving a little bit of money each week can result in a substantial nest egg down the line. These real-world lessons are among the most effective ways to teach the next generation about the value of frugality and the wisdom of long-term investing.

Responsible Contributions

Last but not least, you will want to teach your kids about the importance of giving back to the community. If you tithe to your church, discuss the process with your kids and let them put some of their own money in the collection plate. If you have a favorite charity, urge your son or daughter to start a fundraiser at school. It is never too early to develop the charitable impulse most young people already have.


Your children deserve the knowledge to succeed with their finances. There is a level of understanding, even with young children, that can be introduced and nurtured throughout their formative years. Giving your child the ability to provide for themselves and others is a gift unlike any other, because it gives you peace of mind that your child will be able to have financial success and enjoy the benefits of that success.


These are the views of Social Advisors, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.


Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Richard L Farrar is a registered representative of Lincoln Financial Advisors Corp. Securities offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SICP). Investment advisory services offered through Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. CRN-1211624-060215



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