3 Ways to Have a Better Conversation

By | 2016, Money Moxie | No Comments

We have all received advice on becoming better communicators: look people in the eye, nod, and smile. This shows you are paying attention. Forget all that!

There is no reason to show you’re paying attention, if you are, in fact, listening and paying attention. Here is some of the latest thinking on better conversations.

1. Be in the moment. Be present with the person you are having a conversation with. Don’t multitask. Don’t think about what you are going to say next. Don’t think about dinner. Stay focused. Be in the moment!

2. Listen and go with the flow. According to the National Center for Voice and Speech, “The average rate of speech for Americans is around 150 words per minute.” However, we can comprehend 500-700 words per minute. Since we are able to think faster than the other person can speak, our minds wander.

When thoughts enter our minds, we should learn to let them go. It takes effort and energy to actually pay attention and truly listen to someone else.

3. Don’t equate your experience with theirs. If you’re conversing with a friend about her injury, don’t tell about your injury. If she is talking about the death of a family member, be careful about sharing the time you lost a family member. When in doubt, just remember, it’s not about you.

If you practice these three skills, you will be on your way to enjoying better conversations.

To hear more about these ideas and others from Celeste Headlee’s TED talk: “10 Ways to Have a Better Conversation,” visit TED.com.

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How Much Money Should You Give Your Children as an Inheritance?

By | 2016, Money Moxie, Newsletter | No Comments

“Part of the reason for believing that my wealth should be given back to society, and not, in any substantial percentage, be passed on to my children, is that I don’t think it would be good for them. They really need to get out and work and contribute to society. I think that’s an important element of a fulfilling life.” –Bill Gates, richest person in the world.1

Bill Gates touches on a defining question with which many parents struggle: How do we provide financial security for our children while ensuring they will achieve it on their own? How do we ensure a financial inheritance will help and not hinder their life’s journey? Too many times we see the rising generation become entitled and trapped by the very assets that are supposed to give them freedom. One unfortunate fact is that 70 percent of “rich” families lose their wealth by the 2nd generation and 90 percent by the 3rd generation.2

This same fact applies to most families; most assets that are accumulated by the 1st generation are squandered by the 3rd generation.

So, what can be done to pass on assets to children successfully and how much should you give?

Communicate with your children
The number one rule is communicate, communicate, communicate. The “we’re not going to talk about it” mentality often breeds mistrust and misinformation. If you don’t involve your children in the process, you are robbing them of financial training as well as ownership. You need your children to be involved in the process so that it becomes their future and not just what mom and dad “want.” That being said, financial discussions can be a very touchy subject and each family dynamic is unique. As you start into the process, remind everyone to work to keep the process open and honest.

Define a purpose
“If you don’t know where you are going, any road will take you there.”3 Successful families don’t just pass on assets, they pass on their legacy. Together, with your children, you should define the meaning and purpose of your money. Often this takes the shape of family stories that share values. These values direct how the money is used to benefit the family and society. Based on this you can then take some time to translate your values and legacy into goals.

Define an amount
When you have goals established, then you can assign monetary values, which will help determine the appropriate amount to pass on as an inheritance. For example, if you value the freedom to give back to the community, you could establish a base level of income for your children that will give them the freedom to pursue careers that may not be very lucrative, but have a high impact on the community. Other examples can be funds for education, a down payment on a primary residence, a family cabin to promote family togetherness, a medical emergency fund, a business opportunity fund, or a security fund.

The intent would be to provide a measure of freedom without dramatically changing the child’s lifestyle. Any amount that goes beyond providing a measure of freedom is discretionary and is not needed. Excess money can also lead to a shadow side of freedom – dependence or freedom without self-discipline.

There is a large difference between passing on assets and passing on a legacy. If you involve your children in the process and base your inheritance decisions on a purpose, you can leave the right amount of money to your children while creating a rewarding experience for both.

  1. http://www.forbes.com/sites/luisakroll/2016/03/01/forbes-2016-worlds-billionaires-meet-the-richest-people-on-the-planet/#71fac38041cb
  2. http://time.com/money/3925308/rich-families-lose-wealth/
  3. Alice in Wonderland

Smedley Financial and its employees do not provide legal advice. It is important to coordinate with your legal advisor regarding your situation.

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