Raising Good Kids
Affluenza is a dysfunctional relationship with money or wealth, or the pursuit of it. —The Affluenza Project
Having grown up in a wealthy New England family, Barbara Blouin knows firsthand the luxuries an affluent lifestyle affords: a nice home, a family chauffeur, and the knowledge that money is not a concern. Although money was never a topic of household discussion, that lack of communication, Blouin says, ultimately resulted in a fractious relationship with her parents—particularly her father—and colored her perception of wealth. “Until a few years ago, I felt partly guilty and ashamed about it,” she says. “A lot of inheritors do. I did my best to keep people from finding out. In fact, I bought used furniture so that people wouldn’t know where my livelihood was coming from.”
To ensure his daughter’s financial future, Blouin’s father set up a very restrictive trust fund that allowed her to access only the income portion of the fund. While it gave her lifelong financial security, she was troubled that without her input, decisions were made about how the money could be used.
The situation worsened when she discovered that, without consulting her, her father established a trust for her son, which the boy inherited as a lump sum on his 18th birthday. Later, Blouin’s father would add a clause in his will stipulating that her adopted younger son from a second marriage would never inherit a penny of the family fortune. “My parents didn’t say very much about money, and what they did say wasn’t very helpful,” says Blouin, one of the founders of The Inheritance Project, an organization that aims to help families understand the unique challenges and opportunities of inherited wealth.
Blouin says her father’s lack of faith in her ability to manage her finances drove a wedge between them. As she grew older, she says, “I started to understand much more about the way in which I was brought up and the ways it was damaging to me, and part of that was connected to the money.”
When Blouin’s unhealthy relationship with wealth contributed to the breakup of her first marriage, she became determined to avoid some of her parents’ mistakes. Before her youngest son began drawing from the trust fund she established for him, Blouin arranged a meeting with the trust’s advisor to discuss goals, priorities, and expectations.
In that respect, she has lots of company. Experts say the desire to shape children’s financial values is more prevalent today than in past generations. The growth in the number of newly affluent families, through IPOs, inheritance, and other means, has increased the focus on instilling financial values in children, says Susan Bradley, a certified financial planner and author of Sudden Money: Managing a Financial Windfall (John Wiley & Sons, 2000). Bradley also founded Money Camps, a Florida-based program that shows children and adults how to make informed decisions about money. “Families are thinking about this a lot more than they used to,” she says. “The ‘gilded-agers’ [people from families with three or four generations of wealth] are where you see the stories of inherited dysfunction. New-wealth families are taking a stronger look at what kids should be taught.”
Inherited dysfunction can manifest itself, Bradley says, as a sense of isolation from other members of the community if your family interacts only with wealthy, privileged families. Even while you believe you are providing your child with every advantage and the richest of experiences—the finest boarding schools, private clubs, trips around the world—isolation can be an unintended consequence when children are surrounded exclusively by people just like them.
Dysfunction can also take the form of low self-esteem, particularly in later generations of old-wealth families. “If [the descendants] are not viable, well-educated, contributing people, and they hire people to take care of everything for them, they really have very few skill sets,” says Bradley. “What happens is they don’t have confidence that people in the world would value them for anything other than their money.”
These traits are not as prevalent in new-wealth families because parents in first-generation affluent families—having come from a more modest background—tend to have a greater awareness of, and respect for, wealth and the responsibilities and challenges it presents. Many are also cognizant of the fact that they are dealing with issues that never confronted their own parents.
Money doesn’t talk, it swears.
Regardless of one’s success in business, personal wealth is seldom an easy topic for discussion. Traditionally, speaking about money has been taboo. Children were not supposed to ask questions, and if they did, adults were not obliged to answer them. It isn’t polite, adults quickly admonished. But as personal boundaries in our society have been crossed, discussing money is not only acceptable, it is encouraged.
Jon and Eileen Gallo, authors of Silver Spoon Kids (McGraw-Hill Professional, 2001), a handbook for parents on communicating with children about finances, say parents should take advantage of occasions to speak openly about family finances and articulate the family’s values. “Look for the money moments, the opportunities to teach kids,” says Eileen Gallo, a psychotherapist who specializes in issues related to family and wealth. “Like when the refrigerator breaks or somebody gets in a car accident. Make it a topic of discussion. ‘We are fortunate because the car was wrecked and nobody was hurt, and we are also fortunate enough to be able to get another car. So-and-so isn’t. For other people, this causes a lot more stress.’ ” Jon Gallo, an estate-planning attorney, adds, “If you tell your child that you’re ‘fortunate enough,’ that’s the antidote to the feeling of ‘we’re entitled to have this.’ ”
Although you may worry that your children are too young for these conversations, children are surprisingly perceptive. “Kids begin to be able to be empathic around the age of 3 or 4,” says Eileen Gallo. “They are able to feel and to know that other people have different experiences than they do. It’s a really wonderful time to capitalize on kids’ curiosity about others and their feelings of empathy.”
I don’t even get an allowance. —Macaulay Culkin
Your child’s first exposure to having money of his or her own likely will come in the form of an allowance. Allowances are important tools for learning, says Bradley, because that money represents the first opportunity to manage finances. “It’s important for kids to have their own money to make decisions around,” she says, “and to know what it feels like to run out of money.”
In fact, running out of money is a valuable lesson because it forces children to learn about budgeting funds and prioritizing desires. If your child spends all of his or her money, don’t advance the next allowance, Bradley advises. Instead, let the child figure out how to acquire more money and learn about the long-term impact of short-term decisions.
Many families tie allowances to chores, believing that children who earn their own incomes gain a feeling of accomplishment. Making one dependent on the other is a mistake, say the Gallos. “We think allowances should be created by the parents as simply an appropriate sharing of the family’s resources,” says Jon Gallo. “The family has resources, and the family also has responsibilities. So you are going to get, as part of the family’s resources, an allowance. And you’re going to get some chores as part of the family’s responsibilities. You aren’t doing chores because you get an allowance.”
The easiest way for your children to learn about money is for you not to have any.—Katherine Whitehorn, journalist
Your children may not experience poverty personally, but you can give them an idea of what life is like for the majority of children in the world. “Help your child understand that they really do live in a privileged environment, and that the vast bulk of American society—the vast bulk of the world—does not enjoy the same lifestyle,” says Jon Gallo. The Gallos have developed an exercise called the Cookie Game (see sidebar) designed to help young people understand the disproportionate distribution of wealth in the United States and globally. The process of raising responsible kids, says Jon Gallo, is talking to them, getting them to understand socioeconomic diversity, and getting them involved in helping the community.
Bradley, who has operated Money Camps since 1994, worked with one family that had a net worth of $100 million. In an effort to keep their children grounded, however, the parents maintained a relatively modest lifestyle, living on about $175,000 a year, and never mentioned or acknowledged the family’s wealth. “Their real concern,” says Bradley, “was that the money would destroy their two sons—who were college age—if they knew that they had that kind of money. They were also very concerned that the money would separate them from their friends and neighbors, so they were in the closet and intended to stay in the closet.”
The wife and husband grew up in the middle class, and the husband’s success in business did not change their values or desire for more possessions. The money did not define who they were, and they did not want it to define their sons. Once the boys were mature and already had developed life values and goals, the parents decided to have a discussion about the family’s fortune. Bradley met with each son individually to discuss the money and what it meant. “We talked about their lifestyles, what their concerns were, what their expectations were in life,” she says. Both boys took a levelheaded approach to the money, and like their parents, they didn’t change their lifestyles. “It was all pretty consistent with the views of their parents, which made it easier.”
No one would have remembered the Good Samaritan if he’d only had good intentions. He had money as well. —Margaret Thatcher
Many financial advisors believe one of the best ways to avoid raising elitist children who equate their wealth with superiority, or children who develop low self-confidence because they feel that their wealth is their only value, is to get them into the habit of sharing their good fortune. Philanthropy is critical if you want to ensure that your children do not isolate themselves into the upper strata, away from the rest of society, and it helps them discover that they can be valued for their actions rather than their bank accounts. It is one thing to be privileged; it is another to be pompous.
Marlo and Greg Longstreet already are thinking about the role philanthropy will play in the lives of their two children. The Los Angeles couple supplements small gifts to family members during the holidays with charitable donations made in their names. As 31⁄2-year-old Casey and 4-month-old Tanner grow up, they will be included in the custom as well, helping choose where the donations are made. “I think that’s so important,” says Marlo Longstreet. “We’ll be able to do the research together to figure out which charities we want to give to. It’s a really nice family thing to do, a fun thing to do.”
If the Longstreets choose local charities, Casey and Tanner will have an opportunity to see the impact that their gifts have on others. “This makes a child’s giving concrete, if the child can go and see what happens,” says Eileen Gallo.
If you do not include philanthropy in your child’s financial development, be careful how you explain why. It is acceptable to say that the family has decided to manage family assets internally and keep funds within the family environment.
It is not wise, however, to claim that the family does not have enough money for charitable donations when it is clear that you probably do. Doing so, according to Jon Gallo, “sends a very miserly message, and you’re teaching your children to be insecure about money.”
Make all you can, save all you can, give all you can.
—John Wesley, founder of the Methodist church
As children grow, they will discover the options for using their money. Essentially, they have four choices: Spend it, save it, invest it, or give it away. These alternatives can create problems even for older children, especially when they are aware that the family’s affluence is such that money will always be available. Ironically, deciding how to divide funds among the four options is probably more difficult when there is no end to the supply of funds. With an actual (and fairly inflexible) sum to work with, budgeting becomes easier.
In her money camps, Bradley instructs children to write down financial goals, such as saving for a saddle or a toy. Then she has them budget their money to achieve the objectives. The written plans help children determine what roles each of the four options will play in their financial futures.
In order for children to articulate their financial goals and values, parents must clearly articulate theirs. That means discussing how the family views saving money, whether having first-rate possessions is important, the role of philanthropy in the family priorities, and other topics related to wealth as they arise in family conversations.
“At what point do children become fiscally responsible adults?” asks Bradley. “There’s really not a system for that, particularly within a wealthy family. With a serious amount of wealth, there’s a good chance that kids will never have the responsibility of worrying about how to afford things. They won’t have a sense of confidence that they can make it in the world without the family [money].”
Exploring the options money represents will go a long way toward raising children who have a healthy relationship with wealth. And it’s never too late to help your children achieve a balanced view of the benefits and pitfalls of money, even if children have reached their teens before you realize afflu-enza is setting in.
Negative behaviors can be unlearned, according to O’Neill. “You can learn to be patient and to delay gratifi-cation. You can learn to tolerate frustration. You can learn to not feel entitled.
“Affluenza is very self-absorbing and narcissistic,” she adds. “The cure for that is to turn that energy around so that it’s directed toward others. The idea is to help your children understand that to whom much is given, much is required.”
The Cookie Game
Eileen and Jon Gallo developed this exercise to help children gain insight into how wealth is distributed in the real world. It also gives parents a forum for opening discussions about affluence.
Gather 10 children in a room (you can also use dolls or action figures). Set 10 places at a table, and place a tray with 10 cookies in the center. Have each child draw a number to determine where he or she should stand. Tell the children that each child represents 10 percent of the people in the United States, and the cookies represent all of the wealth in the country.
Select one child to represent the wealthiest 10 percent of U.S. families and give him or her seven of the 10 cookies. Explain that, in the United States, 70 percent of all the wealth is owned by the richest 10 percent of the people. Discuss what this means, and ask whether the child with seven cookies is a better person or is more valuable than the other nine children.
To give your child a realistic view of how the remaining three cookies are divided, explain that of the remaining 30 percent of the wealth, 29.8 percent of it is owned by people in the 11th to 60th percentiles (represented by five children). Break the remaining three cookies into 10 pieces each, so that you have 30 pieces. Now take one of those small pieces, break it in half, and give one of those pieces to children 7 through 10. Explain that they represent the poorest 40 percent of society—more than 100 million people—and they have only that small crumb to share.
During the exercise, encourage the children to talk about how they feel about the people they represent, the people their friends represent, and whether everyone “deserves” the amount of cookies that they have.
Don't Say It
Some common statements that children hear from their parents and other adults can have unintentional harmful results. Here are examples from Eileen and Jon Gallo’s book, Silver Spoon Kids, of how your children may be interpreting otherwise innocuous comments.
We can’t afford it. In addition to being dishonest, this response may cause unnecessary anxiety for small children. If you are going to say no to something your child wants to buy, be prepared to give the real reason.
We’ll pay you for every A on your report card. This is a form of bribery, and it sends the wrong message. Children should be taught to achieve goals for self-satisfaction, not for monetary rewards.
Time is money. No, it isn’t. Equating time spent on anything to its monetary value sends an unhealthy message that your time and your money are equal.
They’re disgustingly rich. Using words like disgusting, filthy, or stinking to describe someone’s wealth encourages a child to see affluence as a negative condition. It isn’t.
Be thankful you don’t live there. The statement implies that happiness can’t exist in a neighborhood or a house that isn’t as comfortable as the one the child lives in.