Comedians Jerry Seinfeld and Kevin Hart know the struggle of raising wealthy kids. When Seinfeld’s kids ask him if they’re rich, he unabashedly tells them “I am. You’re not.”
Hart takes a softer approach. Answering the same question, Hart explains that even though they’re “well-off” now, he’s worked incredibly hard for the money that they have since he came from a rough part of Philadelphia and started life with meager resources.
If you did not grow up with money but have worked hard to accumulate wealth, navigating how to raise your kids so that they aren’t spoiled can be a challenge. You want your kids to have the same work ethic that propelled you into your current financial situation, but without the hardships that you’ve had to endure, how do you instill that principle?
Because most of our clients are self-made who’ve accumulated their money through grit – whether building their own business or putting in long hours in corporate America – we get this question A LOT.
Each family’s financial situation is as unique as their parenting style, so there is no one “right” answer on how to help your kids remain humble while growing up privileged. Much like Seinfeld and Hart, our team offers tailored suggestions depending on who they’re talking to.
In this new series, we’ve asked a variety of our team members to share thoughts on raising well-grounded, fiscally responsible kids.
To kick us off, Ray Peebles recommends focusing on fundamentals, just as when you’re teaching your child a new sport.
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My father and I bonded over baseball, and I learned the details of the game from him. It was a joy to apply those same lessons with my daughters when they started playing softball. Our sessions took patience (lots of patience) as I reminded them that the journey is as important as the outcome…and while they may not succeed at first, persistence will pay off. After years of practice, one of my daughters made the varsity softball at her high school as a freshman.
Practice makes perfect when teaching kids about finance, too. Some of the “drills” I’ve found to be effective over the years are allowance, chores and volunteer work.
Allowance. When your children know that your family can afford to buy small luxuries like new clothes, toys and electronics, they can easily become an expectation rather than a reward. By giving your kids an allotted amount of money each month for the luxuries they’d like, you are teaching them to prioritize their spending and how to budget.
But what is the magic allowance number? How do you know whether you’re giving too much or too little? A good rule of thumb is to give a dollar amount matching the child’s age, received once a week. It may seem like an odd amount to give a 14 year old $14/week, but doling out allowance in such a specific number linked to age teaches the concept of a specific wage that appreciates over time with increased experience.
If they “need” more, offer them opportunities to perform incremental work around the house (extra chores, spring cleaning projects) or suggest neighborhood odd jobs (pet sitting, mowing lawns) to supplement their income.
Clients frequently tell us that the discipline required for this approach is harder for them than for their kids! It’s tempting (and quite frankly, the easier path) to relent. When that happens, it is best to remind yourself that tools for financial responsibility are some of the most important gifts they will ever receive, and ones they will use to build independence, self confidence and a sense of accomplishment.
Chores. One of our clients recalls fondly the paper route he worked in the wee hours of the morning growing up. At just 9 years old, he struck out from the Buckhead Zesto each morning to complete his route before school, earning $0.75 an hour.
Modern life isn’t quite as conducive to the traditional bicycle paper route, but good old-fashioned chores are a fantastic surrogate – especially when integrated into a regular routine. Requiring your kids to wash dishes, vacuum their rooms once a week or doing their own laundry not only teaches them responsibility but also prepares them for independence by introducing life skills. And by adding a financial component, you introduce the concept of earned income.
A side benefit of incorporating chores into your child’s routine is learning time management skills. If your child knows that the bed must be made before school, he learns to wake up 5 minutes earlier to avoid missing carpool. If washing the family car is a weekend requirement before being able to hang out with friends, your daughter will organically learn to get that chore out of the way instead of spending an hour on a device so she can keep her social calendar that evening.
Volunteer. As a child, the only world you know is your own, so setting up regular volunteer opportunities for your kids to see perspectives outside of it can be incredibly enlightening.
And it’s never too early to start. One fun way to help even your littlest ones understand giving back is setting up a donation piggy bank that your tot can “feed” every day. When full, you can decide together to what charitable organization money will go and drop it off with your child. A conversation as simple as whether to help animals, people or nature will plant seeds that will hard wire your child to think about philanthropy as an inherent part of their financial planning.
As they get older, take your children to volunteer opportunities in neighborhoods less fortunate than yours. Encourage them to go with you when you bring their old clothes and toys to an organization like Goodwill or St. Vincent de Paul. Help your child find a cause about which they are passionate or enroll them in their local scouting program where they can volunteer with their friends. Many middle and high schools have service requirements and programs associated with them. Actions speak louder than words, so when you tell your kids money won’t buy happiness, make sure they can see it.
Every parent wants a better life for their children, but establishing boundaries will be more beneficial for them long term. It is never too early to teach the fundamentals and increase their chances for financial success.