How Physicians Can Teach Kids About Money

Wealthy doctors who are also parents face a unique financial challenge:

Your kids are living in the "After."

They weren't around for the "Before."

The extra years of college. The long hours and low pay of your residency. The tiny apartment you shared with two other med students. The protein bar lunches and ramen noodle dinners. The delayed gratification while you paid down your student loan debt.

As challenging as "Before" was, those years taught you how to live within your means, control debt, and build wealth. Your kids don't have to go through the same hardships you did to learn how to manage their own money. Just follow this three-part prescription.

1. Set a Good Example

There's no point in trying to hide your wealth from your kids. They're perceptive, and once they're old enough to have a general understanding of what they have and what those things cost, they're going to intuit that their parents are doing well.

You also don't want to send confusing messages about the value of money. You work hard. You've earned your wealth and the lifestyle that your family enjoys because of it. Kids should understand that there are real-life rewards down the road for good grades and a strong work ethic.

But they also need to understand the limits of money's value. If they see you constantly buying new cars and upgrading your wardrobe, they're going to think that money really does buy happiness. If they see you reigning in unnecessary spending that they know you can afford, sticking to a budget, and using your money to help others, they're going to gain a great understanding of what wealth really is and how to manage it responsibly.

2. Encourage Them to Save, Give, and Spend

One household item you should consider upgrading is your child's piggybank.

Once they reach middle school age, consider opening custodial saving, checking, and brokerage accounts. As they earn an allowance from chores or receive cash on special occasions, help them divide their money into three buckets:

·Save: The sooner your kids learn to "pay themselves first," the quicker they'll appreciate the power of compounding interest. For every dollar they deposit into a savings account, you could make match contributions into the brokerage account so that they can see the differences in how each works.

·Give: Ask your child what causes are important to them. Together you can research reputable nonprofits and community organizations and discuss a sustainable giving plan.

·Spend: Let your child make mistakes. If they empty their account to buy a cheap toy that breaks in a couple days, don't replace it. Or, if they diligently save for a new bike, consider rewarding their discipline with a 10% "bonus" contribution to the purchase.

3. Help Them Set Concrete Financial Goals

Money can feel abstract to a child, especially since financial literacy often isn't taught in school.

You can sharpen your child's understanding by giving them clearly defined goals to work towards.

Don't just buy their next video game or basketball shoes for them. Open up their accounts, look at the Save and Spend buckets, and create a timeline for earning enough to pay by themselves.

As your child grows, scale up goals with them. Set limits on how much you're willing to contribute to a first car or college expenses. Show them how to budget for expenses they may be overlooking, like car insurance or the cost of textbooks.

And once your kids have started to find their financial footing, bring them to our next meeting and we’ll discuss how Life-Centered Planning can help them follow in their parents’ footsteps.

At LI Wealth Management, we believe financial success is about more than building wealth, it's about preparing the next generation to manage it wisely. By teaching your children healthy financial habits today, you're creating a legacy that extends far beyond your career. Visit our website or book a free session today. Together, we'll review your Lifeline and build a Life-Centered Financial Plan that helps protect your family's future for generations to come.