Kids, Wealth, and Consequences: Ensuring a Responsible Financial Future for the Next Generation

Chapter 5. Skills and Experience

In the last chapter we started down the path of financial literacy—giving children the framework and foundation for learning about finance. As important as it is to talk to your kids about financial values and teach them the basics of financial management, at least some such discussions are bound to go in one ear and out the other unless their learning includes plenty of hands-on experience. People—children as well as adults—require many forms of education, including experiential learning, to develop the skills for managing the high-net worth financial world.

Professor David A. Kolb and colleague Roger Fry have developed a model that explains why experiential learning has such great value. The elements of their model consist of concrete experience, observation and reflection, the formation of abstract concepts, and testing in new situations. These elements will enable your children to evaluate new situations and test them against experiences they have encountered in the past. This skill set is especially important when it comes to navigating the fast-changing financial world.

This chapter will present several ways to involve your children in first-hand learning experiences. We will suggest simple ideas for connecting with your children to bring up issues; activities that expose them to your real-life financial and business activities; games that simulate business, investing, and personal financial management; and opportunities to include them directly ...