S2 E2 - Raising Healthy Children in the Land of Wealth, Part 2 ft. Dr. Jim Grubman
Download MP3Welcome back to the Our Family Office podcast. I'm your host, Adam Fisch. In last week's season premiere, you heard part one of my conversation with Doctor Jim Grubman. If you haven't heard it yet, I encourage you to go back and listen.
Adam Fisch:And here's part two where you'll hear us discuss how to talk to your kids about your family's wealth, the importance of teaching money skills, and preparing your children to be balanced and grateful while living in the land of wealth. Enjoy.
Adam Fisch:What have you found are really the healthy ways for parents living in abundance to raise their kids to have those values when you don't necessarily have the natural limitations that would breed them?
Dr. Jim Grubman:Well, that's a great segue. And that's what we have to talk about next. The idea that parents want their kids to turn out well, and that yet at the same time, because nobody might have told them kind of how to be wealthy, that when you get to the land of wealth, what is it that you actually do? And what needs to be changed? So for a lot of people who become wealthy, they're really making their best guesses, and have very little guidance, which is often why the main process that is so important is parenting.
Dr. Jim Grubman:Parenting in the land of wealth requires adaptation from parenting in middle class or working class or poverty lifestyle. But the thing is, nobody really explains very much. There are books and some wealth managers work with people, as you know. But when it comes down to the how, that's really what makes a difference. And what are some of the how?
Dr. Jim Grubman:Number one, starting from an early age and building money skills, not just talking about wealth and wealth skills. The foundation of wealth skills is good money skills. And good money skills are hard to develop for any parent and any family has to be done mindfully, starting with an allowance. A lot of people have biases about allowances, oh, no, you shouldn't give a kid an entitlement, or allowances are only if you do chores or something. The reality is an allowance is important as a vehicle for learning.
Dr. Jim Grubman:And it's not just how much money you get, it's what are the responsibilities you have for your money. So there's an expense side to the allowance system as well. But developing a good allowance system for kids starting at around six or seven and going up. Talking about your values and being open about money. The most important thing to pass on is not just the money, it's decision making.
Dr. Jim Grubman:You have to teach kids throughout childhood in what Jolene Godfrey has called a financial apprenticeship. And so the process during childhood is of building greater and greater money skills. And then of course, comes the question that many parents dread, but it's actually one of the greatest questions in the world. Usually happens in the age range between about eight and 10, maybe 11. Any idea what that question is, Adam?
Adam Fisch:How much money do we have?
Dr. Jim Grubman:Close, it's the "are we rich?" question. And it's funny because in many families, parents dread it and they don't realize that actually, it is a certain age appropriate question. It's an age cognitively when kids begin to realize there are differences in the world. That's why it happens in the eight to 11 year old range or so. It's a natural question.
Dr. Jim Grubman:And it's actually a good question and one not to be avoided, because it says the kid is noticing things and is curious. And they're not asking, as you sort of said, how much money do we have? What they're really asking is, who are we? Who am I? How do I fit into the world? How is our family comparing with other people? It's actually part of identity development.
Dr. Jim Grubman:And being able to answer the are we rich question, it shows openness and ability to talk about things and curiosity for why do you ask that now? It's an opportunity. But if you come out of general society, you have no preparation for how to answer that question effectively.
Adam Fisch:Right. And the reflexive answer for a lot of people is no, we're not.
Dr. Jim Grubman:We're not.
Adam Fisch:Right. And to your point about identity, right, kids notice. Right? They can see they're out in the world. They can see if your house is 8,000 square feet and they're driving anywhere else in town where they see kind of what most houses are, they can see it.
Adam Fisch:Right? They see the vacations they're able to go on. They're more perceptive than parents often give them credit for. And so the risk of just dismissing it, of saying, no. We're not because you're worried about what they may conclude from it.
Dr. Jim Grubman:You don't want them to be entitled or spoiled, of course.
Adam Fisch:So Right. But then the byproduct is they have this identity confusion. Right? It's almost like, you ask your parents what color your skin is, and they give you a different answer than what you see in the mirror. And it's sort of, well, what does that mean?
Dr. Jim Grubman:Another thing that people often don't think of is, the question is precipitated because something has happened. I've talked to many families, I can remember one in particular, where actually, I was doing a family meeting, which is another one of those how things is really helpful to do family meetings after a certain point. But I was talking with the parents and two of their kids who were in their early 20s. And they were talking about remembering when one of the sons came home and said, or actually that afternoon at dinner said, are we rich? And they looked back and the parents said, why did you say that then?
Dr. Jim Grubman:And the son said, it's because Joey, the neighbor came over and he looked around and he said, wow, you're rich. And I had never thought of that. And so I thought, am I? So I figured I'd ask you. But the idea that there are other people in the world or that on the playground or at school or someplace that kids are going to say, wow, you're really rich, or your daddy runs such and such a company that owns half the town or whatever.
Dr. Jim Grubman:Kids may not always be aware of that, and it will be brought to them. And parents have to be open to discussing it and providing accurate information. Let me, if I may add one thing. There's a lot of really bad advice out there about handling this and this mentality. One of which is to, in order to make sure the kid is not entitled to sort of slap them down with responses like, I am, you're not. Or you won't be, I'm going to spend it all. Or we don't talk about money, never ask that again. And it really does slap the kid down and say, that's not appropriate for you to even bring that up. And for a lot of kids, they remember the pain of that more than what the answer was.
Adam Fisch:Right. And then never mention it again. It never gets discussed.
Dr. Jim Grubman:So they're left on their own to have to figure things out.
Adam Fisch:So what's a better answer there? I know you sort of alluded to asking more probing questions, right? Of like, what led you to ask that? Or, you know, what do you think about all this? How can parents answer that in kind of a productive way? And I don't think anyone's advocating that you show your 10 year olds your bank statements, but how can you kind of reveal in an age appropriate way?
Dr. Jim Grubman:And I've often told this sort of approach, and I've used it within my own family and stuff, we have a certain degree of affluence. Because remember, you're looking at a kid who has a certain age, say, eight, nine, maybe up to 13 or something. And a good response is to give them an idea of the question that they're really asking, which is where are we in relation to the world? So a good answer is to say something like, well, there's really sort of three ways to be in the world. There is having enough, there is not having enough. And there's having more than enough. We have more than enough. And then you stop. Don't like you're right. You don't say, let's talk about numbers. Or can I explain to you what a stock is or anything else? It's like we have more than enough. And you wait. It may be that the kid will say, okay, I thought so.
Adam Fisch:Right.
Dr. Jim Grubman:It's like, good. Thank you for validating.
Adam Fisch:That might be enough for what they were asking.
Dr. Jim Grubman:That's all they wanted. It may be the kid will say something like what parents are terrified about, which is, give me more detail. Like how much more than enough? Or like, what do you mean?
Dr. Jim Grubman:And again, you're not on the spot. All questions are legitimate. Some answers may be deferred to another time with more preparation. But again, this paradigm gives you leeway to actually go further, because you can say, well, we have more than enough. And depending upon the family situation, you can say things like, some people have a little bit more than enough, some people have a lot more than enough.
Dr. Jim Grubman:Some people have like way more than enough. We have a good size more than enough. We're okay, we're pretty good. And that's shorthand and in some ways code for, we're not just barely out of middle class life, but we also don't have a jet and three mansions and stuff. It's like there are people, because a lot of parents really worry. It's like, well, there's clearly people richer than we are. So we shouldn't tell them that we're rich because those people are rich.
Dr. Jim Grubman:And being able to say, well, we have more than enough and we're probably maybe middle of the ground on that. There are people who are richer, and there are people who are a bit less, but we're sort of in the middle. And a kid may smile and say, oh, good. And very often, again, that age, at that point, you stop and say, why do you ask? Has something happened? Did somebody say something to you? Are you thinking about something? Like you must have a reason why you brought that up now. I'd really like to hear.
Adam Fisch:What I love about that is, first of all, just the framing of it. You know, the idea of framing it relative to enough, I think sends such a great message that it's it's not about always needing more. Right? It's relative to having enough. Like, just that concept of, hey, there is such a thing as enough, I think is a great message to send and a great value to send.
Adam Fisch:And I also love that it's so open ended that, you know, as you said, it can be a dialogue. You can take it where you want. The kids can take it where you want. It might be an opportunity where, you know, if this is something that you're really passionate about, when they say, well, it's more than enough. You could talk about philanthropy. Right? It might be, well, it means that we have the opportunity to help other people that don't have enough. Right? And and it's a natural segue if that's something that's really important to you. Or it can be, you know, it it allows us to take nice vacations, do nice things together, make nice memories together, right, which is also a great value to send that, hey this wealth is about us creating closeness, creating experiences and memories. That's what's important. So I love that framing that it really gives the parent the opportunity to highlight what about that wealth is important and valuable to them.
Dr. Jim Grubman:Very sharp guy, because you're right, it sets the stage for so many great conversations in context of that. To continue what you just pointed out, again, it sets the stage for talking about charitable giving and philanthropy. It also opens the idea of that actually, how did we get to have more than enough? Well, that was through a lot of hard work that grandpa or somebody when I work hard, it's to be able to make sure that we continue to have more than enough. I grew up with not enough. And that was really hard. I'm really happy that you're not growing up that way. But at the same time, that also taught me a lot. It's also why in our family, we think carefully about what we spend money on. Because if you spend too much money and stuff after a while, you're not going to have more than enough.
Dr. Jim Grubman:And that is sort of it provides a framework for explaining a lot of behaviors and values about how we got here, how we stay here, and how you also will need to participate and continue those things. So that you have more than enough if you wish to have that.
Adam Fisch:Well, and I'm gonna pull up the thread of the last thing you said, Jim, when you talked about if you wish to have that. So, you know, in our industry, we talk about wealth preservation and wealth stewardship. But in your view, not every family feels that way. And you've talked about the idea that not every family wants to build a dynasty and that's all right. Can you talk a bit about your work in that area and kind of what you found?
Dr. Jim Grubman:This gets into some of my newer stuff. And I was talking before about the era of wealth two point zero. For those who are curious, wealth one point zero was the era before the development of the wealth management industry. But also in a lot of places it still exists where it's pretty much only about the money. We're moving now into wealth three point zero, that takes a more positive and strength based approach.
Dr. Jim Grubman:And to your question in particular, one of the things that families and advisors have often pounded the table for is, you must be a good steward, you must preserve the money, that must be around that's success. If you lose the money, that's failure. Everybody will work to preserve it. And we're even going to take care of it to protect the money from the family in case the family starts to do things with it.
Dr. Jim Grubman:In the modern era and looking ahead, we began to question some of that. Then the idea that the family or an individual could make a conscious decision that they, in fact, want to go back to maybe having enough and not necessarily more than enough. There are organizations like Resource Generation and other places that really say, look, there's so much wealth inequality in the world. For some people to have so much more than enough is unfair. And that if everybody had enough, so that we brought up the people with not enough, wouldn't that be a better world than if we have people who span the entire spectrum from way not enough to way more than enough. And so some families, depending upon their politics, their values, their faith, may say, we're gonna make the conscious choice that we're going to give away or help or spend down in various things helping other people. And that we don't have to have more than enough to this extent. And that's a choice that we can make. And for wealth managers, that is of course, anathema.
Adam Fisch:Right, doesn't come naturally to the industry.
Dr. Jim Grubman:But the reality is that's a choice that people can make.
Adam Fisch:And I think it's important to distinguish between people making that choice consciously and once they've gone through the process of integrating the wealth compared to people who are avoidant and who are saying like, I can't handle this money or I'm scared of the money or I'm overwhelmed or I don't feel equipped. So I just wanna get rid of it. Right? Like those are two very different ways to arrive at that conclusion. And the first is a lot healthier than the second. And I think probably a lot less likely to lead to regret.
Dr. Jim Grubman:Again, actually you put your finger on it quite accurately, which is: for those who are avoiders, they know they have more than enough. But they're really uncomfortable with it. They like having it. In fact, they're often very security, financial security oriented. So they want to have more than enough.
Dr. Jim Grubman:But they don't want to look like they have more than enough. They don't want people to know that they have more than enough. They don't want their kids to get the impression that there's more than enough, because they would then assume they're going to go into spending it all. And then lo and behold, they would not have more than enough. So it really drives a lot of unfortunate behavior.
Dr. Jim Grubman:The idea that you can be open about it, you can talk about it, you can teach about it, you can prepare your kids to know how to live with more than enough in a balanced way. But also at the same time, say, you also can make your decisions based on your own values as to how you wanna do this for the future.
Adam Fisch:I mean, in my mind, I think it just comes down to being able to develop your own identity, which is a challenge that everyone goes through. And wealth and people growing up in extreme wealth, it just adds an additional dimension and maybe an additional complexity to it. But that process of, who am I and what's my place in the world is something that everyone has to go through. And if you like anyone else, if you don't go through it in a healthy way, then that's going to manifest in various unhealthy behaviors.
Dr. Jim Grubman:It's really about preparing your children to be comfortable and balanced and grateful in living in the land that they live in, honestly, with accountability, with gratitude, and to let them make their own choices. Because actually, the overlay of guilt or shame or anxiety or entitlement gets in the way of good decision making. Remember I said before, it really it's not about passing on the money, it's passing on good decision making that is the task, the difficult task of good parenting.
Adam Fisch:So that'll lead to what'll be my last question. And I know we could talk for hours about this, but, what would you say as a takeaway? What can families do to best empower the rising generation to live lives of purpose and fulfillment, which is really what any of us wants for our kids?
Dr. Jim Grubman:Well, remember I said before that part about it's all about parenting? It's really not about money, it's about good parenting. I mean, that's a hard task for anybody in any member of society. There's a few practical aspects, and then there's some larger aspects. Remember, we talked about the cognitive ages, age appropriate stuff with kids.
Adam Fisch:Sure.
Dr. Jim Grubman:There's an age between about nine and 12, where kids also are developing a sense of initiative, delay of gratification, working hard towards something, frustration tolerance. And it's important in empowering an adult in the next generation to also foster that part in when the child is smaller and younger, the encouraging people to try to take risks. If you fail or have a setback, not to be unhappy about that, but to say, okay, so what did you learn from that? What would you do differently next time that might have gone differently? Did you teach that mistakes are okay if they're in service of learning?
Dr. Jim Grubman:As kids get older, to empower them by giving them the skills, start to move beyond just the money skills, actually teaching them how to handle larger and larger amounts of money and wealth. To be able to empower them with the gift of communication. To start doing family meetings, where the family talks about what is essentially the business of the family, not in a business sense, but there's a lot of things to talk about of wealth and relationships, estate planning, philanthropy. There's a lot of things to know coming into adulthood with wealth. And then in adulthood, to be able to collaborate and to be generous in terms of giving with a warm hand and not just with a cold hand after death, And to be able to see and help your kids grow into being adults managing wealth, and being able to again, make mistakes, learn and develop their own values that it's a lifelong process.
Dr. Jim Grubman:And families that do that effectively, number one, are good parents. And number two, focus on developing a sense of purpose. Not too long ago, I was talking with someone else and we were talking about how in very significant families, multimillion dollar and billion dollar families, the idea of having a work ethic stops making sense. You don't need to work to earn money to make a living. What is a work ethic? And I often talk about it's really, it's less about having a work ethic. It's more about having a purpose ethic.
Adam Fisch:Right.
Dr. Jim Grubman:And in many families, there is a strong message. Everybody in this family has a purpose, we work toward purposes, you're expected to exert effort and to persevere and to do things. Nobody in this family just sits back and does nothing. That's not who we are. And we will not let you do that either. When that message is conveyed during parenting, kids grow up to have a purpose ethic.
Adam Fisch:Well, Jim, that's great. Some really wonderful insights. Thank you so much for the conversation. Thank you for all your contributions to the industry. We'll we'll link to your website and to your books, which have been a huge resource for me and for us as a firm. So thanks so much for being here.
Dr. Jim Grubman:I really appreciate the opportunity. And it's been a great conversation. Again, also put your finger, as I've said repeatedly, on many of the important topics. And it's this sort of conversation, I think that really moves things forward for the people that we care about, which is our the families that we work with.
Adam Fisch:Absolutely. And we'll cover a lot more of it this season. So thank you.
Dr. Jim Grubman:Thank you.
Adam Fisch:Thank you so much for listening. Our Family Office is Canada's first purpose built shared family office. And the Our Family Office podcast is produced by Henry Shew. Please visit ourfamilyoffice.ca for more information about our firm, and don't forget to rate, review, and subscribe so you don't miss an episode. And, of course, share it with your family.
Adam Fisch:See you next time.
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