Talking about money

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Talking about money

I was recently working with a family client when the conversation became rather animated while discussing money. Most of the members of this particular family viewed money in a positive light; as a means to an end, the ability to make choices, the ability to make a difference, a medium of exchange etc. However, for some, money might be viewed as the cause of conflict, the ruin of family life, the lure of the forbidden and the priority of their parents.

Money can be a taboo subject, and deciding what to do with it is often a challenge when it comes to the next generation. We’ve seen a wide range of views, and it is common for different individuals and families to have different opinions. For example, for some, money is a means to enjoy life now over and above financial security for the long term, while other individuals choose to leave the bulk of their wealth to charity rather than to their children – because they may feel their children don’t need the money and don’t want to ‘spoil’ them.  

Different types of money

In my conversation with the particular family referenced above, ‘active’ money – money earned from working – was distinguished from ‘passive’ money – money that is gifted or inherited – during our conversation. When discussing this topic, the following questions were raised: Should ‘active’ and ‘passive’ money be valued differently? Should someone who earns £1m be treated differently from someone who inherited £1m? Should the money be spent differently depending on how it was received? These questions provoked much debate and got the group thinking more deeply about entrepreneurship, wealth creation and wealth preservation.

Money and happiness

In addition, we talked about personal aspirations, lifestyle goals and monetary needs. Interestingly, there has been some research into the optimum income for happiness. For example, Angus Deaton (2015 Winner of the Nobel Prize in Economics) conducted a piece of research which concluded that happiness and income are correlated, but only to a threshold of $75,000. Whilst this research was conducted in 2010, the concept remains the same. Is there a tipping point after which happiness is no longer linked to income? I.e. is there a quantum above which increases in income no longer produce a corresponding increase in happiness and contentment?

Of course, another factor to contend with when discussing the value of money is ‘lifestyle creep’ – as you have more money, your needs and tastes often develop too. It’s a lot harder going back to basics once you’ve got a taste for a more luxurious lifestyle!

Creating Conversations

When I sat down to write this post, my hope was to provoke some conversation and interesting dialogue within families. Why not ask your family members how they think about money and see what they say? There is no right or wrong, and the answers might surprise you.

Likewise, might it be worthwhile to make a list of what you want? What do you really want in life, what do you value most? How much would it take to fund that? Or perhaps you should ask what you need – how much would that change the total amount?

And for those of you who have sufficient funds to meet your needs and wants, a final question to consider: what is the purpose of your wealth? What it is for? Do you know? And does your family know? 




Lucy Heywood – Deloitte UK

Lucy Heywood is a Consultant with the Deloitte UK Family Enterprise Consulting team, where she supports business families in developing governance structures to assist with succession planning. Working with families from across the UK as well as those based elsewhere, she assists them in aligning their goals and aspirations to ensure a smooth progression of family assets through generations. Lucy has been with Deloitte for five years, gaining her ACA accounting qualifications and focusing on private clients and family offices. Her previous experience includes relationship management at Barclays Capital and placing non-executive directors at Gerson Lehrman Group, which has equipped her with extensive experience in project and stakeholder management. Most recently, Lucy is a finalist for Young Practitioner of the Year as part of the STEP Private Client Awards.

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