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Financial Education for Wealthy Children

 

-- Financial Literacy or Moral Education? --

 

 

If you are trying to protect your assets over generations, what are the biggest risks you should beware of?  Are they economic risks such as possibilities of unsuccessful money management, or are they political risks such as possibilities of property confiscation by the oppressive and/or discriminative government?

 

In fact, you need not be too afraid of such risks as mentioned above if you have taken appropriate measures.  In other words, if you have deposited your assets under the management of one of the good Swiss Private Banks, any such risks, economic or political, will be minimized.  That is what the Swiss Private Banks are operating for.

 

However, there are other risks which are even more serious.  If you ignore them, it might mean much more serious damages that will occur more frequently than in the case of the economic or political risks.  To avoid such risks, probably you should learn more lessons, make more efforts and conduct more carefully for years although such lessons are rarely discussed or may be even unnoticed because you are too busy.  What is worse, almost no financial institutions might help in respect of such risks.

 

You may wonder what these risks are.  The answer is: the risks related with the transferring of the assets to children.

 

The issue of the asset transfer to children is not merely the question of inheritance, succession or estate tax.  It is not the question within the law, but is related with the values in more extensive meaning.  It is, in a sense, representing what the property ultimately means to you and/or your family.

 

What is your property for, or what should it be for?  Evidently its graison dfetreh must be the happiness of you and/or your family.  However, have you ever thought of the possibility that your children and/or grandchildren will be made unhappy by the huge properties?  Even if there is no conflict among your children as inheritors, will they be able to manage such properties properly and effectively?  Is there any possibility that such huge, inexhaustible assets may be an unbearable burden on your children or they may deprive the children of the pleasure of achievement or the chances of overcoming the hardship in their life? 

 

Such misfortunes resulted from the huge money that was earned for happiness of the family would not be acceptable.

 

Avoiding such situations is the primary purpose of financial education for children of the wealthy family.

 

Generally speaking, the wealthy (especially the persons becoming wealthy through succession of the wealth) are tending to be exposed to prejudice of ordinary people, who have only stereotyped imagination of the world of the rich.  A wealthy child is required to be so strong in mind as to endure and overcome such prejudice.

 

It does not mean that such a child should be too proud.  On the contrary, it means that wealthy children should accept such prejudice as unavoidable, but they should never admit, yield to or sympathize with it.  To keep such attitude, the wealthy children must recognized the gnoblesse obligesh of the wealthy persons and learn to be proud of performing their own obligations in society.

 

In this case, it is extremely important that the wealthy parents should try to be good advisors and examples for their children.  The parentsf attitude for money or properties will be unknowingly observed by their children.  They will react to it.  For example, the huge amount of money may cause people to be too proud or arrogant to others.  The child seeing such arrogance of the parents may take over such attitude, or on the contrary may be ashamed of being wealthy.  Either of those attitudes will have adverse effects on the proper activities of taking over, management and protection of the huge assets.  The wealthy child should have constructive and positive attitudes for money and assets.

 

In addition to the appropriate advice by the parents, it will be better if the children have a chance to meet with their potential mentors.

 

Child Financial Education may be considered to be the learning about the skills of investing or money management.  This may be true in one aspect.  However, one can learn skills for investing or saving, or money management intelligence when one comes of age.  It will not be too late when the child starts to learn investing after graduation.

 

On the other hand, the other aspect of the child financial education is much more important and must be learned at an earlier stage of the childfs life.  It is to learn the right attitude to the money.  In other words, it is a moral and sentiment education about the money.  It might be no exaggeration if we say such moral education is the very key for successful accumulation and protection of the wealth over generations (*).

 

(*) Very wealthy families which have been successfully accumulating and protecting the wealth over generations are said to have their own know-how of such financial moral education.  Though it seems very hard for outsiders to learn about such know-how, but there might be a chance.  At least a part of such know-how seems to be known to the Swiss private bankers who have protecting the assets of such families for centuries.  You can learn a part of it from a recently published Japanese book titled gLearning from a Swiss Private Banker.h  It describes the teaching of the Swiss private banker as a mentor to the author (Mr. Ken Honda), who later utilized such knowledge to become a young millionaire.

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