Want to teach your kids to be responsible with money? Here's what experts recommend

·6 min read

Shaquille O’Neal, the retired NBA star turned TNT analyst, earned more than $285 million during his NBA career in salary alone - which doesn’t count endorsements and his now-TV money. But in a recent podcast, O'Neal spoke about how he didn’t want his kids to just think of themselves as wealthy without having to work.

“My kids are older now,” he said. “They’re kinda upset with me. They’re not really upset, but they don’t understand. I tell them all the time: We ain’t rich. I’m rich.”

It’s not that he won’t give them anything.

“You got to have bachelor’s or master’s [degree], and then, if you want me to invest in one of your companies, you [are] going to have to present it to me … Bring it to me, and I’ll let you know.”

Former NBA star Shaquille O'Neal said he is trying to teach his children some hard truths about wealth management.
Former NBA star Shaquille O'Neal said he is trying to teach his children some hard truths about wealth management.

Of course a single podcast quote doesn't define what he's taught them for decades about wealth and their relationship to it. And it is likely working well for the O'Neal family. But after the statement went viral, like many things O’Neal says, we asked the experts: Was this actually good advice to follow?

Sort of, said Glenn Kurlander, the Head of Family Governance and Wealth Education at Morgan Stanley Wealth Management. But he would have changed a few things about what O’Neal said. Some of it, he said, could be helpful if a parent was looking to reset expectations or if a child is experiencing challenges from peers due to their circumstances.

“But at the same time," he warned, "that approach may be unhelpful in other circumstances and might to seem to be nothing more than a glib response that cuts off conversation and discussion rather than foster it."

So where do you start?

Tip One: Knowing what your own values are and explain them to your kids

Ruth Nemzoff, a Brandeis scholar and the author of Don't Bite Your Tongue: How to Foster Rewarding Relationships with Your Adult Children, says that talking to children openly about a family’s values about money and how much financial help a parent is willing to provide is an important discussion that every family should be having openly and often.

“The first thing is you always have to know what your own values are,” she said. “So in some families the idea is to make a lot of money and in other families it’s to have a good education and whatever money is trivial. So some families will say the most important thing in life is doing good and then if you have any money you should give it away.”

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Kurlander recommends building “a culture of family partnership” where kids understand from an early age their role in their family's wealth is and what investments they're expected to make in themselves (i.e. doing well in school, etc.)

“What we are doing is involving kids in that discussion, a discussion that is rooted in the idea that as a family we need to understand what is this wealth for?” he said. “Now we built it, what is it for, what does it mean to us as a family? How are we going to use it together as a family? Most fundamentally, where are we going together in life and how do we know when we arrived. That conversation is driven by our values, our goals and our shared sense on what wealth means to us.”

That culture of family partnership, he said, has helped a lot of his clients avoid many of the pitfalls that come with wealth.

Tip Two: Know that they're watching you

If O’Neal followed that philosophy with his sons their entire life, Nemzoff said it wouldn’t have been a surprise (or shouldn’t have been) when he said 'no' to them as adults.

“I’m sure that whenever he went into a toy store he didn’t buy every toy in the store. He said, 'You can pick one toy,' or something like that,” she said.

Ashley LeBaron-Black, a professor at Brigham Young University's School of Family Life said that even toddlers should start getting comfortable with handling money.

"Parents are by far the biggest influence on children's financial learning and financial attitudes," she said in an email. "Kids learn best when parents use a combination of three teaching methods: demonstrating healthy money management, talking openly with them about money, and giving them hands-on experiences with money to put your teachings into practice and learn from their own mistakes."

Tip three: Be honest about what happens when they turn 18. And after that.

"As adolescents slowly transition to adulthood, they should be given ever increasing financial responsibility because an important marker of adulthood is financial independence,” LeBaron-Black said. “Wealthy parents of young adults should try to strike a balance between helping their kids have the best possible start in life while also helping their kids achieve financial independence.”

No matter what financial status a family has, Nemzoff said it’s important to talk to your kids, long before they turn 18, about what will be available to them when they get ready to go to college or whatever their plans are after they turn 18.

“You don’t have to give them how many pennies you have but what you do need to say is ‘We have put enough money aside for one year of college and you have to earn the rest’,” she advised.

And then after that as well. Parents, she said, should be honest about expectations for what they can provide for future generations or help for their children in their adult lives. And they should also be honest about their own financial situations.

Which means no surprises when it comes to what the plan is for a transfer of wealth in the family.

"Your kids, as responsible adults, need to know at least a broad outline of how you're going to give away your money after you die," Nemzoff said.

Parents may plan on giving on their fortunes away, to evenly divide among college funds for the grandkids or pass it on to each kid. Nemzoff advises not leaving any surprises to the will and discussing the plan beforehand. And adult children should also share what they have planned in case something happens.

"The other reason that children need to know is most kids are not going to leave their parents living under a bridge," she said. "So they need to know have the parents saved for their own retirement or their own nursing home or their own medical care."

Which brings us to tip four ...

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Tip four: Don't be afraid to talk about it

So when do you tell your kids how much money is in the bank account?

The worst thing, all experts said, is to not talk about it.

"Money is the last taboo in families frankly and that attitude is typically unhelpful," Kurlander said. "When we allow money to be taboo we are teaching our kids that there is something so mysterious and dangerous and frightening about money that we don't talk about it. And if that's the attitude that kids develop, it's very challenging to see how they'll ever develop a healthy relationship with the wealth we leave them or the wealth they create on their own."

This article originally appeared on USA TODAY: How to teach your kids about money and financial responsibility