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Can affluent moms give their children privileges of their money without spoiling them?

Can affluent moms give their children privileges of their money without spoiling them?

August 05, 2023

Admit it: Sometimes it is tempting to toss money at a parenting challenge to make it go away. Sick of yelling at the kids to do chores? A cleaning service is not hard to find, and easily affordable. Tired of nagging your teen to earn her own spending money? It’s tempting to just hand over your credit card for school shopping.

But you know that when it comes to parenting, the right thing is often the harder thing. And in the case of affluent moms, money can actually make parenting harder. How do affluent moms balance our financial comfort with money values that we know are so important to pass to our children? I certainly don’t want to scrub our toilets just to prove a point to my children, but there are some lessons I do want to instill. We are in a bubble, but our children might not always be in this bubble. Plus, hard work, gratitude, and respect of others is critical no matter what tax bracket our children land in.

It is a parent’s duty is to raise children with life skills that facilitate independence, and to be good stewards of what they earn or what they are given. Money is just one, fantastic tool that we have to teach these lessons. I believe in preparing children through habits, mindset, work ethic, education, and giving back. But the most powerful, consistent tool we have at our disposal is our own behavior. Our children are always watching!

Before you can confidently model healthy money behaviors and attitudes, you must first dig into your own money scripts. Money scripts are the ingrained feelings and associations we have with money, most of them stemming from childhood or early experiences with money and work, and often play out in unconscious ways.

Even though my income is very high, and I was raised in a wealthy family in an an affluent neighborhood, I am extremely frugal, and am proud that my children are extremely respectful, hard working, and have their own great scripts about money! They have long lists of chores they must do, my oldest has a part-time job at the local dry cleaner, both teenagers babysit kids and take care of the neighbor’s frogs. As a family, we are constantly looking for ways to save money around the house (our latest effort: water bottles in the toilet tanks to reduce water consumption. Don’t laugh [though my kids, admittedly, do]).

My own money sensibilities were shaped by my Depression Era grandparents, even though my grandfather was the CEO of a Fortune 500 company, and had vast assets. In fact, my very modest grandparents, coupon-clipping mom, and humble dad were so good at making sure we appreciated everything we had, my brother and I thought we were poor. My mother’s enthusiasm for skimping at the supermarket had me convinced we were really struggling, and as a young child I’d sneak cash into her purse. I am so grateful these adults were hell-bent on raising children who were not entitled. It worked. I want the same for my children. You do, too, no doubt.

If you’re struggling with ways to instill an appreciation for money, here are some tools I use daily with my children, now ages 8, 14 and 16:

Delayed gratification

When my children see something bright and shiny at the store that they really want, they have come to expect my reaction: “Wait until tomorrow to see if you really like it. We will come back if you do.” Usually it’s not so exciting the next day, of course.

Empower them to spend

One of the biggest reasons I started my kids on an allowance because I wanted them to chose how they spent their own money. At the store, they were always asking if I would buy them baseball cards or candy. I would say, “Yes, you may have that if you use your own money.” Often, the desire was different if they have to use their own cash. Regardless, having power over their own spending money forces them to budget, run rudimentary cost-benefit analyses, and understand the power of saving. None of these incredible life lessons are learned if you just toss the 50 cent bubble gum in the cart and buy it for them!

Recently, my 16-year-old complained that she doesn't receive enough gas money, making random claims about how much she spent. Through her debit card, we tracked her gas expense and her gas allowance. We were able to concretely see on a spreadsheet that she was wrong [cue mom gloat!].

Child labor

Work ethic was preached early and hard at my parent’s house. Work and school were revered as holy time in my family. It could not be missed, you had to show up rain sleet or snow and sickness to your job or school. Plus, they gave us very little pocket money. So I hustled. I shined shoes, washed cars, babysat, ran lemonade stands (my mom made me pay for the powdered mix out of my earnings), worked at the shoe store and taught tennis lessons. In college, I noticed I received about the same allowance as my friends, but it wasn’t enough for me (I was ambitious from the start!), so I worked at a local bank as the switchboard operator. No one forced me to get a job, but I wanted the extra walking-around money. I loved making money. I liked the freedom it gave me. Money, especially money I earned myself, simply felt fantastic.

My kids have a similar experience. Lily, 16, is going to Thailand for three weeks this summer. Sure, I could stroke the check without missing a beat. Instead, we agreed she is responsible for paying for a third, and the trip must include community service (so she chose to volunteer at an elephant orphanage instead of the spa and tailor-made clothing trip she originally gunned for). She got jobs with the neighborhood cleaners, babysitting, and as a camp counselor, and we created a spreadsheet that broke down her income monthly into monthly installments towards the trip. I’m proud of her! She’s on her way to Thailand, due to her hard work.

Be straight with your kids

While my parents did a great job pulling the proverbial wool over our wealthy eyes, I do not advocate for trying to convince your children that you have less than you actually do. That creates a culture of deception, and sets your children up to fail in the event that they have substantial assets of their own one day.

Instead, be frank with your children about what you have, what they can expect to have one day. Be very clear that not only is their reality a very cushy bubble, emphasize that there are never any guarantees in life. It is essential to let our children know that it is not easy to achieve your level of income and net worth, and the bubble doesn’t guarantee happiness or contentment. I regularly tell my children how hard I worked to afford all the wonderful things in their life (there are no trust funds in my family). I also show them by discussing my work each day, bringing them to my office, and introducing them to my colleagues and clients. They see all the time exactly what I do to be able to afford what we have. The message is clear: I believe in them, they, too can achieve this and more if they get along well with others, are disciplined, and do well in school.

NOT keeping up with the Joneses

Peer pressure is a real thing. We know that if your friends are overweight, you are more likely to be overweight. Same with teenagers and sex and smoking, and adults and divorce (one Harvard study found that if you have a close friend or family member who gets divorced, your chances of splitting from your spouse increase by 75 percent).

If your family enjoys living in an affluent neighborhood, where your children attend school with your social peers, it is only natural that your kids expect to drive similar cars, wear similar clothes, and take vacations like their friends.

These sorts of pressure are an excellent teaching opportunity.

I have a client whose tween kids frequently asked her why they were the only one of their neighborhood friends who didn’t have a second (or third) home. The reality was that she could afford one or two more properties (something her kids clearly picked up on), but chose not to. She told her children:

“I also love visiting our friends at their beach and mountain homes, and I see why they spend money on those houses. But that is not something we choose to do. As we often talk about, everyone has different money values, and in our family, we chose to use our money differently. For example, we prioritize spending our vacation time and budget on volunteering and travel where we can learn about new cultures and people. Also, just don’t forget that what people own is not always what they can afford.”

But the best way to combat the pressure to keep up with your neighbors is to do so yourself. My friend is literally worth billions of dollars, and owns apartments in New York and Rome. Yet she sends her children to public schools because she wants them to be exposed to all kinds of people. When she throws parties at her amazing mansion in one of the most affluent communities in Los Angeles, she makes a point not to have a valet parker since there is plenty of room on the grounds for guests to park themselves. Even though there is no need, none of the other mansion owners on that street wouldn't dream of not having a valet parker, and I’m sure there are tongues wagging about that detail, but her point is made to her children (not to mention the frivolous neighbors).

Model your values in how you treat others

If we treat our friends that have billions the just as well as our staff, our kids pick up on that. They know when you’re being phoney, and know when you are genuinely kind to all people — whether or not they have money. In fact, I know that my kids notice when adults are kind and helpful to those who have less. One of my own early lessons on this was as a child spending time with my very successful (not to mention busy) grandfather. As we walked out of a James Coney Island restaurant one day there was a woman having car trouble in the parking lot. My granddad helped her start her car and made sure she could get on her way. He treated the guys that worked in the shop of his factory better than or just as friendly as the goober-smoocher rich neighbors. I recently took my son — my grandfather’s great-grandson to get his haircut at the same barber where my granddad got his hair trimmed for 50 years. The barber raved at what a "prince of a man" my grandfather was because of the way he treated him and his son. I was thrilled to hear this, of course, but even happier that my 8-year-old son received an excellent lesson in materialism and respect.

Give back

Giving is the most important money lesson affluent moms can give their children. For you, giving might mean donating to organized charities, or to our employees that might be going through a hard time, or using money to lift a neighbor in a time of crisis. Children don’t often see our tax return where our charitable contributions are listed, but it would be good to explain to them and educate them on how we are spending our money on charity. A lesson that I try to instill in my kids is that money is a valuable resource, one that is our responsibility to manage with care and a sense of service, opposed to something we are entitled to, whether it is given to us or earned.

Recently, I sponsored a table at a charity lunch for human sex-trafficking. Afterward, I told my 14 year old about the victim who spoke: a girl who reminded me of my daughter had been lured into a sex-traffic ring at age 14. The girl eventually wound up in the unequipped court system but luckily found her way to a charity that helped her get back on her feet. This inspired my 14-year-old and her friends to do a project on this subject at school.

You are their greatest money lesson

Our children constantly absorb your money mentality. They see what makes an impression on you. Attitudes about materialism and giving rub off. Attachment to money or possessions can influence them.

Our kids know our priorities — are they things, or people. Do you spend on a charity, or a Range Rover? You can do both, but is it clear which is the most important? I often hear my single mom clients say they have more money than time. Your kids understand that intuitively. If you spoil your kids with your most scarce resource — time — isn’t that worth more than money to them? My grandparents spoiled us with their time. They were the busiest people I knew. Yet they never acted like they were in a hurry or preoccupied when we were together. Instead, I had their undivided attention, which gave me more confidence in myself than any amount of money.

One of the most important lessons about money came from my grandfather about 7 years ago. My grandparents owned a ranch in the gorgeous Texas Hill Country that was worth millions of dollars. The land was a jewel, with clear-water rock bottom wide creeks with rope swings that were shaded by huge cypress trees. I can still remember finding Indian arrowheads (treasures!), the amazing oak trees older than Jesus, smells of cedar, glorious sunsets, wide open spaces, dirt roads, turkeys, deer, wild hogs, dove, hawks, rabbits, raccoons, armadillos, skunks, coyotes howling, ducks, and miles of bluebonnets.

That was where our family gathered for Thanksgiving and Easter for more than seven decades, and six generations. There were usually 25 or more of us there for those two annual occasions, and I couldn’t wait to see my cousins and aunts and uncles. When my grandfather was in his last days, I asked him, “What do you want to happen to the Ranch?” He replied, “I don’t care what happens to the Ranch, as long as everyone gets along”, surprising and wise words. Surprising, because he loved that place. Wise, because he loved his family more. He knew that there could be discord if he told his four children, “You have to keep the ranch so the family can keep gathering here.” Instead, he planned ahead, sold the ranch when the market was up, and prevented what could have been infighting, or a fire sale to pay estate taxes. That’s an excellent lesson as to what is important about money, emotions, ego. The family agreed to sell the Ranch three years ago, and I do miss it. But I miss more my grandparents. They were the Ranch.

Even if you’re working through your own money mindset issues, there are some easy, outward habits that you can display (or flaunt!) to your children. Consider teaching them:

  • Pay your bills on time. Forgo autopay, and sit down with your children and have them pay the bills with you, even if online. Review the bill for accuracy
  • Explain the importance of insurance: health, auto, life. This basic lesson contains many hidden lessons about investing for the future, risk management, and being a responsible citizen.
  • Don’t order the most expensive thing on the menu when someone is taking you out to eat - that’s rude!
  • Iced tea at a restaurant is expensive. Calculate cost per glass when you make it at home, and compare to $3 per glass at the restaurant.
  • Review your bill when at a restaurant to make sure it is accurate. Then, have your child calculate the tip, and discuss whether the service was fair, good or exceptional.
  • Don’t shop at Walgreens or the gas station, items there are much more expensive because of the convenience factor.
  • Always look for ways to be frugal. This saves money, but frugality nearly always is also great for the environment. For example, do not use the paper towels when you can use a dish rag! If you must to use a paper towel, please only use half. Fill up the soap bottle with water to make it last longer. Don’t drink bottled water, as tap is free! I would be ridiculed if I carried around a bottled water in front of my grandfather.
  • Hand-me-down clothes from cousins are wonderful, and require a thank-you note.
  • Write thank-you notes.
  • When on a road trip, pack your own food to avoid stopping at drive-thrus or — heaven forbid — buy something from a gas station!
  • Stop buying books on Amazon and check out a book at the local library. While you’re at it, donate to your local library!

Even the best-intentioned parenting can go awry if you don’t watch your own actions. Recently, a friend was shopping at Pottery Barn for a blanket with her 10-year-old daughter. The mother explained the savings she pocketed because of the sale. Instead of internalizing this great life lesson, the daughter innocently asked if they could go back to Hermes and buy the gorgeous pink cashmere blanket they had just admired. As moms, we are being watched by our children, including our foibles and paradoxes. Be kind to yourself, forgive, and try again!