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Consumer Reports


Financial values are a family project

http://www.jewishworldreview.com | (KRT) For Dallas actor Alan Ackles, passing down his financial values to his children posed a unique challenge.

"Being an actor, it's like you don't know where your next paycheck is coming from, or if it's coming at all," Ackles says. "It's kind of hard to teach any financial responsibility when you don't have a budget."

Still, he made sure to impart his beliefs to his kids.

"It's more or less osmosis than just sitting them down and saying, `You need to put X amount of dollars aside, you need to give X amount of dollars to charity,"' he says. "It's more by role-modeling."

When it comes to passing down financial values to your children, there are two keys:

Start early, and remember that it has everything to do with what you do, not what you say.

"Children learn about finances by observing their parents' values and attitudes about money," says Viktor Szucs, a certified financial planner at Quest Capital Management in Dallas. "Parents have an opportunity to teach values relating to money to their children from a very early age."

First, start with the basics. Give your children a good perspective about money to counter the incessant flood of ads that extol materialism.

"Money is a tool for a meaningful life," says Elizabeth Jetton, national president of the Financial Planning Association, which represents the financial planning industry. "When we talk to inheritors, one of the sad things we find is that they don't have purpose or meaning, they just have money."

Parents should do their part to encourage good habits and responsible behavior, regardless of wealth. But it's a challenge.

"We live in a society where one's success is often not measured by one's values, but the value of things they own," Szucs says. "Sadly, these societal shortcomings have found their way to the playground.

"Some children believe that their parents have an unlimited supply of money, and their idea of work is helping their parent punch in the access code at the ATM machine."

Children must learn one crucial bread-and-butter money-management principle, and that is they can't have everything.

"One of the values that people want to pass along is that you have to make choices," Jetton says. "You have to learn how to literally manage your money. How you spend your money tells a story."

Don't send mixed messages.

"They watch very closely what Mom and Dad do, not necessarily what Mom and Dad say," says Paul Richard, executive director of the Institute of Consumer Financial Education in San Diego. "If Mom and Dad are constantly at the ATM machine, the younger children think that's the way in life, and you go there for money."

Ackles says he taught his kids the importance of balance.

"We've always taught them to be wise with their money - not to buy the most expensive thing, but also not to buy the cheapest thing, because you end up replacing it," he says.

One son, Josh, 29, clips coupons and contributes to his 401(k) savings plan. His brother, Jensen, 26, is an actor in Los Angeles and has appeared in several television shows.

"There were lean times during those growing-up years, because there were times I didn't work," Ackles says. "They understood the value of money."

Teach your children that money can add meaning to the lives of others.

"If parents share with their children the gifts they make to their charity, the gifts they make to their church, that helps form a habit," says Bill Carter, president of Carter Financial Management in Dallas, a financial planning firm.

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Some wealthy families establish foundations for charitable purposes.

"The entire family can serve on the board of the family foundation, and when the parents die, the kids can run the foundation," says Keith Lair, consulting partner at Family Legacy Administration Services in Richardson, Texas, which helps families establish foundations. "The parents, while they're alive, if they instill in their children a spirit of giving, it's more likely that their children will in turn use some of that money to give when they grow up and are adults."

Along with hardcore financial assets, the bequeathing of an inheritance should be accompanied by the passing down of parents' values and how those dovetail with their wishes on how their children should handle the money.

Some financial planning firms hold "family conferences" at which parents discuss with their children their core values about handling money.

An example of an agenda for a family conference could consist of a code of conduct for family members, information on how to be good stewards of the family wealth, discussion of concerns that wealth will inhibit ambition, and a plan for the care of elderly family members.

The value of money is something that previous generations learned - the hard way. It's clear that, try as they might, they haven't been able to pass on those financial values.

"I have felt for some time that the Baby Boom generation and Gen X have lived the easy life," says William Taylor, a financial adviser at Carter Financial Management who works with young people. "From World War II to today, the U.S. has grown into a world leader, with Americans having the highest quality of life.

"I tend to think that this sustained period of an above-average way of life lends itself to excess and taking for granted the need to save."

Americans saved an average of just 2.2 percent of their after-tax income in the first quarter of this year, down from a high of about 8 percent in 1992.

What would it take to get future generations to adopt the frugal habits of their parents and grandparents?

"Another Depression era before there is a mass focus," says Richard of the Institute of Consumer Financial Education. "You can't get younger people to see to the future in retirement because all of their money is devoted to the present."

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