Can Wealth Make Your Kids Less Capable? - Joline Godfrey
Navigating Wealth Podcast Recap
Published:
Duration: 51 min
Guests: Jolene Godfrey
Summary
Jolene Godfrey discusses the impact of wealth on children's capability and the importance of financial fluency as a developmental skill. She emphasizes practical steps parents can take to raise financially capable children in affluent families.
What Happened
Jolene Godfrey, founder of Bounce 10, has spent decades helping wealthy parents raise financially capable kids. She argues that financial fluency should be taught as a developmental skill, much like teaching a child to walk or read. Godfrey challenges the popular notion encapsulated by the phrase 'shirt sleeves to shirt sleeves in three generations,' suggesting it's more myth than rule.
Godfrey's background as a clinical social worker and an in-house shrink at Polaroid Corporation laid the foundation for her insights into financial education. Her work in the early 90s with INC Magazine, interviewing women entrepreneurs, highlighted significant financial education gaps for women, leading to her first book, 'Our Wildest Dreams.'
Financial parenting, according to Godfrey, involves actively engaging children in financial decision-making, helping them develop their own definition of success. She identifies a paradox in wealth: the ability for parents to provide everything for their children can hinder their development.
The concept of 'invisible allowance' arises from unacknowledged financial support, which can lead to unrealistic expectations. Godfrey suggests families should expand their concept of wealth to include not just financial, but intellectual, social, and human capital. Ron Lieber's approach, where parents pay for basic items and children work for branded versions, is one method to impart financial responsibility.
Godfrey recommends giving children 'practice money' to make financial decisions and learn from their mistakes, emphasizing the importance of family culture and values in financial education. She suggests parents should model financial decision-making and conduct family meetings to discuss financial and value-based topics.
Claiming family culture is more challenging today due to societal influences. Nevertheless, by the age of six, financial discussions should be a part of family conversations, and parents should allow children to make low-stakes financial mistakes to prepare them for larger decisions later.
The normalization of high consumption standards in certain communities complicates setting different financial standards for children. Godfrey notes that children are looking for a moral compass and strong guidance from their parents, despite the diminishing parental voice due to external influences like social media.
Jolene Godfrey underscores the importance of resilience and persistence, encouraging parents to let children engage in challenging tasks. Her insights provide a roadmap for affluent families to raise capable children in an environment where external influences are pervasive.
Key Insights
- Financial fluency is a developmental skill that should be taught to children, akin to learning to walk or read. Jolene Godfrey emphasizes the importance of engaging children in financial decision-making from a young age.
- The phrase 'shirt sleeves to shirt sleeves in three generations' is more myth than reality. Jolene Godfrey believes that with proper financial parenting, the cycle of wealth loss can be mitigated.
- Invisible allowance can lead to unrealistic expectations in children. Jolene Godfrey advises families to expand the concept of wealth to include financial, intellectual, social, and human capital (FISH).
- Parental guidance remains crucial in today's society, where external influences like social media and club sports often diminish the parental voice. Children seek a moral compass and strong guidance from their parents.