What the 1 percent are teaching their children about money

You may think ultrahigh net worth individuals have nothing to worry about when it comes to money.

The experts who help them manage it would be the first to tell you you're wrong.

Those with ultrahigh net worth are defined as households with at least $5 million excluding their primary residence, according to Spectrem Group, a wealth management research organization.

Making sure those millions last can be a challenge for super wealthy families, many of whom have had their financial success created by one generation and do not want to see it lost by their successors.

The saying "from shirtsleeves to shirtsleeves in three generations," or the concept that a family's wealth could eventually dwindle, regularly comes up in conversation with ultrahigh net worth individuals, said Carol M. Schleif, deputy chief investment officer at Abbot Downing, a business unit within Wells Fargo that focuses on families with $100 million or more in total net worth.

To combat those fears, many of those families are teaching their younger generations how to treat money so it lasts.

And those same values can help all families learn to become wealthier.

This chart shows the number of ultrahigh net worth individuals in the U.S., excluding their primary residence.

"It doesn't matter how many zeroes are in your bank account," Schleif said. "It matters you think through what end result you're trying to achieve with your child and what lessons you can do to illustrate that."

These four steps can help you get started.

A healthy relationship with wealth starts with a message that may sound counterintuitive: It's not about the money.

"We're more than what's in our bank account," said Judy Spalthoff, executive director and head of family and philanthropy advisory at UBS. "If what defines our family is just what's in our bank account, it's not productive. We're sending the wrong message that that is who we are."

Communicating those values means de-emphasizing the amount of wealth the family has. For ultrahigh net worth families, that often means not telling children the family's total net worth until the time is right.

"They don't want to remove the kids' sense of purpose and drive," Schleif said. "They want them to find their own way. They want them to struggle and fail the way they did."

Children who come from successful families need to have the opportunity to fail.

That means not taking their homework to school when they forget it or bringing them their cleats to their soccer game so their team will not have to forfeit a game, according to Spalthoff.

It also means having them learn the value of a hard-earned dollar and a hard day's work, even though the family does not necessarily need the money.

"If we keep them so busy that there's no time to work, and then they graduate from college and they have to work for the first time, we haven't prepared them for that moment," Spalthoff said.

This chart shows the number of individuals in the U.S. with $25 million or more in assets, excluding their primary residence.

Those first jobs can provide meaningful lessons, Schleif said, starting with where the money from their pay checks really goes.

That is why many wealthy families often require their teenagers to work.

"It comes from wanting [their children] to be intentional and wanting them to be really grounded noble human beings," Schleif said.

Understanding how and why a family's wealth was created is crucial to preserving it.

By talking through your family history, you can trace from generation to generation and find themes that have been passed down, Schleif said.

"It helps people realize, 'I have that same touchstone and here's an example in my own life of how I've lived that out,'" Schleif said. "It allows subsequent generations to be thoughtful and careful with how they're doing that."

Those kinds of meetings can help all families to identify their goals, even if they are not extremely wealthy, according to Spalthoff.

"You're fulfilled so much more to be living life with purpose and driving towards those ambitions and goals," Spalthoff said.

While many individuals who have attained massive business success remain frugal, they are not tightfisted when it comes to sharing their wealth.

Families can share these values by making charitable contributions a family activity, Schleif said.

That can include opting to give donations to favorite charities instead of holiday gifts. Or families may choose to set up formal charities or donor-advised funds to fuel those efforts.

Making the effort to give back creates an abundance mentality, Schleif said, which can help all families, regardless of their wealth.

"You don't get to where you are in life just by solo brilliance," Schleif said. "What you put out in the world comes back to you magnified and tends to permeate."