🌱Teaching Your Kids About Money: Creating a Financial Legacy

☕ Good morning!

Most families leave behind paperwork, but the wise ones find a way to leave behind a mindset. 

Trusts, wills, and wealth plans matter, but they don’t teach discernment under pressure. Your heirs won’t preserve the fortune by memorizing your tax strategy or knowing the difference between a GRAT and a CRUT. 

They'll do it by thinking clearly when others panic and allocating capital as if it were second nature. The ability to think about money is the real multi-generational asset.

Let's dig into the tactics that make this possible, and what elite families are doing today to institutionalize judgment, simulate ownership, and convert complexity into compound learning.

🏡 A Tale of Two Families

On a long enough time horizon, legacy isn’t measured in dollars, but it’s measured in decisions.

Take the Vanderbilts. Cornelius Vanderbilt amassed a fortune in the 19th century through shipping and railroads, becoming one of America’s wealthiest people. 

By the third generation, the family’s fortune had significantly dwindled due to extravagant spending, lack of financial discipline, and absence of a cohesive wealth management strategy. 

By the time of the 1973 Vanderbilt family reunion, there wasn’t a single millionaire among them.

In contrast, John D. Rockefeller, founder of Standard Oil, implemented structures to preserve his wealth across generations. He established irrevocable trusts in the 1930s and 1950s, facilitating tax-efficient wealth transfer. 

Today, the Rockefeller family’s wealth is managed through Rockefeller Capital Management, with an estimated net worth of $10.3 billion divided among approximately 200 descendants. 

Their enduring wealth is attributed to disciplined financial planning and a strong emphasis on family governance and shared values, two pillars that most dynasties overlook until it’s too late.

📡 Expose kids to ambiguity, not just answers

Most parents try to teach finance with worksheets or lectures, which can be great for specific financial knowledge, but it can be a fundamental medium to teach the thought process.

Money is a context game, and it's absorbed by osmosis and modeled behavior, not memorized formulas. The goal isn’t to normalize navigating uncertainty.

For example, a private equity partner lets her teens listen in on Sunday night deal calls. No filtering. No dumbing it down. 

They don’t always understand what’s happening, and that’s intentional. Exposure to real friction builds calibration. She asks them to jot down questions, and later the model the why behind the decisions. 

It’s not about raising mini-MBAs, but more so normalizing uncertainty. Getting them comfortable not having the full picture, and still making thoughtful decisions, because that’s how things tend to work in the real world. 

🎬 Money Talks… With My 9-Year-Old Son

This week, we’re mixing it up with a special guest: my little guy.

👇Watch this YouTube Short and steal some tips for sparking money conversations with your own kids.

🎾 Learn to play both sides of the game

It’s easy to cheer when “numbers go up.” But real financial chops show when the market’s down, volatile, or just plain irrational.

Most families teach kids to save and invest during good times. Fewer teach them how to navigate bad ones, or even how to use down markets or corrections strategically. 

Each dip and correction is a teachable moment in motion. Don’t shield them, walk them through it. Why do people think the correction happened? What are people afraid of? What would a long-term investor like Warren Buffett do here? What would a high-risk individual do? 

It’s not about predicting the market. It’s about pattern recognition. About learning that red days aren’t necessarily bad days, and they’re often the best ones to act.

💼 Simulate ownership and skin in the game

Want your kids to take money seriously? Give them some, but with rules.

Give them a small allowance with the only string attached that they document everything they spent money on. Boom, a clear record of “cause and effect” spending behavior, ready for analysis.

Set up a mock fund using real market data and let them build a portfolio with companies they know. You might even be surprised at what they pick: for example, Roblox ($RBLX) likely outperformed your portfolio in the past year, with a gain of over 150%. 

Help them understand how companies make money and how shareholders benefit. 

And if their portfolio tanks? Good. This kind of simulation builds psychological calluses. It’s the financial version of letting your kid lose the championship game in 6th grade. Tough in the moment. But that’s how financial resilience, and judgment, are built.

Here are a few options:

KidVestors Stock Market Simulator is designed specifically for kids and teens, and uses  virtual currency to teach investing basics in a fun and interactive way. 

HowTheMarketWorks offers a customizable stock market game with real-time prices, allowing users to create contests and access a wealth of educational materials.

Investopedia’s Stock Simulator provides a realistic trading experience with $100,000 in virtual cash, enabling users to trade stocks, ETFs, and cryptocurrencies with access to Investopedia’s extensive resources.

🏛 Make Sense of Teaching Your Kids About Money

Build intellectual capital like it’s a portfolio. A financial mindset is your legacy’s operating system, which is why smart families utilize tutors and establish family habit loops centered on action, study, and synthesis. 

Does your 8-year-old need to know how to calculate Berkshire Hathaway’s EBITDA? Probably not, but they can learn what it means to run a profitable lemonade stand (side hustle), and why buying a fancy juicer might tank their margins short-term, but make them more productive in the long term.

Too often, education is outsourced to “experts” who simplify things beyond usefulness. I can’t stress this enough: let kids see the practical application of what they’re being taught. 

You can also install a family activity around learning small pieces of the broader financial picture. Start a monthly finance dinner. Give each kid a topic to research, even something simple like “what’s a credit score?” or “why do stocks go up and down?” Then discuss. Reflect. Repeat.

Every family passes on wealth, and that can be accomplished through structured trusts, but very few are actually able to transfer and pass on the wisdom gained and nurtured while creating and preserving that wealth.

Stay savvy, stay proactive, and keep your financial future bright.

Until next week!

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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