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Wealth Planning

New year—new ways to create positive family habits

You can take concrete actions, rooted in behavioral science, that may help your family grow closer and prepare better for the future.

The arrival of a new year can set the stage for new beginnings. 

Families resolving to deepen their ties over the next 12 months—and breathe life into their wealth-planning efforts—may find that three strategies rooted in behavioral science and family governance best practices are just what they need to get started.

1. Make it a habit

As a parable, think about the benefits of automatically transferring a portion of your paycheck each month to a 401(k) account. You investigated, made a decision, and now “habit” takes over—without you having to decide each month whether or not to save.

Similarly, by taking certain repetitive actions, your family can achieve important goals together.

For example, if you’ve agreed to hold monthly family meetings, put dates and times on every family members’ calendars at the beginning of the year. Once scheduled, it’s more likely the meetings will move forward as planned.

Similarly, clarifying the purpose of your meetings in advance also makes it more likely they will take place. Planning will allow you to address one or more objectives in a single meeting, such as cultivating financial literacy; learning about the family’s history; enjoying each other’s company.   

Goal setting, along with the repetition of certain behaviors, can also make it easier to focus on core family values outside of scheduled meetings. For example, to help young children develop lifelong habits of thoughtful money management, you might try this:

  • Get three glass jars and label one, SPENDING; another, SAVING; and the third, SHARING.
  • Each week, ask your child to apportion their allowance among the three jars and describe their decision making. These are opportunities for you and your child to talk about:
    • Needs versus wants, and the benefit of giving up something now to save for something bigger at a later date.
    • The importance of sharing; for example, by donating to help other children or animals. Outside events, such as natural disasters, are also opportunities to engage children and raise their awareness of others’ needs.
  • Importantly, do not rescue a child from the consequences of their choices:
    • If they deplete the funds in their SPENDING jar before their next allowance, discourage them from “borrowing” from another jar—and perhaps help them think of ways to earn extra money.

Family health and wellness benefits may also accrue from the simplest of regular family gatherings. For example, research has confirmed that the greater the number of nights each week that parents sit down to dinner with their children, the less likely the kids are to experiment with drugs or alcohol.1

2. Write it down

After considering what you and your family members want to achieve together in the coming year, write it down.

Putting your collective resolutions on paper, being as specific and as detailed as possible, makes it more likely you’ll pursue that vision with a sense of shared purpose—and accountability. For example, if you resolve to get more exercise this year: Saying you’ll live a healthier lifestyle won’t be as effective as setting aside time to go to the gym three times a week. Similarly, if the family wants to shortcut the discussion process by simply duplicating last year’s plans, find new ways to involve them. For example:

  • Encourage family members to share their personal goals for the new year. This can have the additional benefit of enhancing communications and accountability within the family unit. It can be insightful and meaningful to learn what is on everyone’s minds as they start a new year.
  • Include younger children in setting goals for themselves and for the family. Their perspective can enhance family discussions, as well as help them learn about making goals in a defined framework.

Client families who take this approach generally tell us they find it easier to stick to goals that are written down and agreed to by all involved. 

Why? As behavioral science explains: Creating a document all family members share eliminates the challenge of repeatedly having to conjure up everything to which they have agreed. The easier a plan is to remember, the easier it is to achieve.

The key is to stay focused on small, achievable goals. For example, one client’s family focused on enhancing their beneficiaries’ financial literacy and drew up this plan:

  • By age 18—Develop a basic understanding of financial and investment terms, including: the time/value of money (i.e., compounding), investment diversification and risk allocation.
  • By age 22—Understand basic accounting and the purpose of a financial statement.
  • At an appropriate age—Learn about the family trust’s investments, and also about other types of investments that exist around the world.
  • Along the way—Learn about why people make bad financial decisions, including the common themes that emerge, and steps to mitigate such mistakes. Their suggested reading: Dollars and Sense: How We Misthink Money and How to Spend Smarter by Jeff Kreisler.
  • Give back—All beneficiaries should learn that philanthropy is a key part of their having wealth and opportunity. We want all future beneficiaries to give back generously to the communities they live in and the charitable organizations they believe in.

3. Have fun

Families that play together, stay together!

Having fun together is especially important after restrictive pandemic living. But more than that, cultivating a sense of joy can help reinforce everyone’s sense of purpose, and enhance their willingness to undertake the tasks at hand.

Fun group activities in the here and now can be especially valuable while planning for the family’s finances and governance, which typically focus on hard-to-imagine outcomes 10, 20 or 30 years away.

Planning a family gathering? Create an agenda that allocates two hours to discussing important family updates—and the rest of the time to enjoying a nice meal, having a pizza-making party or playing a favorite family game.

By making the meeting something special, something enjoyable, you can turn wealth planning and decision making from a “have to do” to a “get to do.” It’ll help motivate family members to continue sticking with the plan…and sticking with each other.

1.The Importance of Family Dinners. A survey by The Partnership to End Addiction. September 2012. https://drugfree.org/reports/the-importance-of-family-dinners-viii/


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