Why the financial legacy you leave shouldn’t be about money

Talking to your kids about money isn’t easy. At what age should you start? How do you explain it in a way they can understand? And how do you find ways for them to put into practice what you are showing them in theory?

While those are all important questions for families to address, talking to kids about money is about more than teaching them the mechanics. It’s about imparting your philosophy on how best to build, protect and, preserve wealth over a lifetime. It’s about passing along your beliefs on the role money plays in life, in your family and in your community.

In short, it’s about legacy.

It’s the cornerstone of what we found in our recent Wealth Transfer Report: Families that transfer their knowledge before their wealth not only build more confidence among members of the next generation, they have a greater chance of creating a lasting financial legacy.

As the father of four boys ranging in age from 15 to 21, I’ve had the money talk not just four times, but in four very different ways. We did the allowance thing, opened bank accounts for each of them and taught them how to use credit wisely. But, in my mind, those are table stakes; lessons each of them needed to learn so that one day they would be productive, self-sufficient adults.

More important to me, was that with each of these practical lessons, I was sharing with them what’s been the guiding financial principal in my life: Spend your money where you spend your time.

It’s something I learned from experience. Many years ago, I bought a ranch in Miles City, Montana. It was absolutely beautiful and my kids loved it, but it was a daylong drive or a flight and we were never able to get there. We eventually sold the ranch and bought a cabin in Wisconsin, just a little over an hour from our home. We spend nearly every weekend there with our family, making it one of the best financial decisions we’ve made to date.

Still, I’m sure if you asked my kids, they’d each say they are sick of hearing me give my spiel. With each trip to the store, the hockey rink, the water park or wherever, I’d re-iterate my philosophy before they made a purchase: Spend your money where you spend your time. Sure, half the time they came back with trinkets and trash that they’d forget about two hours later, but my hope was that when they got older, the message would have sunk in and they would invest in the things that truly enriched their lives.

No matter your net worth, you can leave a financial legacy to your children. And that legacy can have an incredible impact on their financial future.

I know families who didn’t have a lot of extra money who taught their children the value of saving every penny they earned and never spending more than they have—which is creating a financial legacy. Those children didn’t inherit a dime from their parents, but they became the benefactors something much more valuable: a solid understanding of how to be good stewards of whatever wealth they would create in their lifetimes.

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.