Raising children is hard, no matter how much money you earn. But wealthy parents have a unique hurdle: In a household where cash is plentiful and luxuries are commonplace, they must find ways to teach their offspring to respect money, understand budgeting and empathize with non-wealthy peers.
“Money is a finite resource, no matter how much you have,” says Jayne A. Pearl, co-author of the book “Kids, Wealth and Consequences.” “There are a lot of issues [that arise] when children’s attitudes about money and entitlement are out of whack.”
For example, wealthy children who don’t understand the value of money may lack empathy when confronted with evidence of poverty, suffering and inequality, experts say. These affluent brats may treat the idea of holding down a job as terribly boring and unnecessary. They may find themselves unable to relate to friends from different economic backgrounds or — perhaps, worse — manipulated by freeloaders who recognize an easy target.
On a practical level, these well-heeled slackers may lack the financial literacy required to manage their wealth effectively or direct a team of financial advisors.
While many of the following child-rearing strategies are directed at wealthy parents, experts note that knowing how to teach financial literacy is essential for parents from all socioeconomic backgrounds. Teaching the value of money “isn’t just for high-end parents,” says Michele Borba, author of “UnSelfie: Why Empathetic Kids Succeed in Our All-About-Me World” and contributor to the U.S. News For Parents blog. “It’s an across-the-ZIP-code issue.”
If you’re looking to remove the silver spoon from Junior’s mouth and ensure that he never acts like a rich jerk, read on for strategies to teach him about the value of money.
[See: Dear Younger Me: 12 Financial Truths We Wish We Knew Earlier.]
Consider an allowance. “Allowances are golden,” says Borba, who recommends introducing kids as young as age 5 to a piggy bank.
Youngsters can kick off their financial educations by simply learning about and holding different coins and units of money. As they get older, the piggy bank can become more complex, with different containers earmarked for different categories, such as spending, saving and charitable giving.
If earning an allowance is tied to completing certain chores, consider splitting those tasks into “citizen of the household chores,” which the child is expected to complete without compensation, and “work-for-pay chores,” which are connected to earning an allowance, says Neale Godfrey, CEO of the Children’s Financial Network, a company that empowers children and their parents to take charge of their financial lives. “You’re teaching them all the life skills that it takes to run a household,” Godfrey says. “Rich people have [household] help, and the kids think this stuff magically happens.”
If you have a regular maid, gardener or other household assistant, remind those workers that they shouldn’t be completing the chores assigned to your child, Godfrey says.
Go beyond the basics with charitable giving. Make sure your kids’ understanding of charity isn’t limited to watching you don a tuxedo before attending your $50,000-per-table charity gala.
Start working charitable giving into their allowance system, Godfrey says, by earmarking, say, 10 percent of money they earn for future donations.
As they get older, consider integrating volunteering and hands-on charity work into their schedules. “Expose your kids, through literature, through museums, through empathy-driven [strategies], by taking them out and working at a food bank or at a shelter,” Borba says. “Seek exposure to help raise your child to [have] a different awareness.”
Greenlight the part-time job. Wealthy adolescents can learn countless valuable lessons from working a part-time job, experts say. “Teens need to have a blue-collar job,” Godfrey says. That could mean any job that involves hands-on work, from bagging groceries to ringing up orders at the local gas station.
Don’t let your child take the easy road by getting him what Godfrey calls a “fake job” at the company where you’re a high-level executive or at your friend’s business where Junior reports directly to your buddy. Forget nepotism, experts say, and have your kid apply for a real gig at a restaurant, grocery store, loading dock or wherever else local teens find part-time gigs in your community. Your child will learn more, and he won’t receive special treatment from employees who are afraid to tick off the boss’s kid.
[See: 12 Best Part-Time Jobs to Pay the Bills.]
Talk about it. Don’t let money discussions become taboo in your family. Talk to your kids about where your money comes from, how you manage it, how you make decisions and what you value, experts say. If your wealth is inherited, “talk about the genesis of the wealth, where it came from, how different people and branches of the family have managed that wealth,” Pearl says.
Let kids in on family financial decisions. If you’re buying a new car, for example, discuss the features you’re willing to pay more to upgrade, and those you aren’t. Ask your children what they want most in the new family car: Does color matter? Safety record? Gas mileage? Then discuss which types of vehicles meet those standards. Take them to the dealership to demonstrate how you negotiate, so your kids begin to understand that fancy, new cars just don’t appear from thin air, Pearl says.
[See: How to Talk to Millennials About Money.]
Say no. “The hardest two-letter word in the world is ‘No,’ but that’s what parenting is all about,” Borba says. Saying “No” when your kids ask for unreasonable purchases is not about being the villain. It will help them learn to separate wants from needs when they’re adults, experts say.
Think about it this way, Godfrey says: Would you let your offspring run into traffic if they begged? Would you let them do drugs if they asked persistently? Would you let them jump off a roof? Of course not. You’d say “No” because you’re keeping them safe and teaching them about limits. The same rule holds true for refusing to acquiesce when they ask for a new car, new toy or the latest gadget.
“Your legacy is not about the money,” Godfrey says. “Your legacy is about your values and life skills that you can pass on to your children, and if you haven’t done that, you’ve done them a disservice.”
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How to Prevent Your Kids From Becoming Rich Jerks originally appeared on usnews.com
