Helping children in affluent business families understand the value of money

Listen to Dr. Lee Hausner of California share her views of how affluent business families can help children become responsible with money early on in their lives, and understand the limitations and expectations around money. It is important for affluent parents to distinguish between what their children need and what they want. Giving children an allowance from a young age can help teach them limitations and will raise them to be more responsible with money in the future.

Affluent parents have to teach their children how to be responsible with money. When your parents said, “We can not take a family vacation this year because the car broke down and we are going to have to get a new car,” as the families become more affluent the conversation does not ever occur and things just are there. Somebody gave my granddaughter a twenty-five dollar gift card. Of course the first thing she sees costs like forty-nine ninety-five. And I see Eva, she is looking at the card and I said, “Eva, is forty-nine larger or smaller than twenty-five?” She says, “Larger, Grandma.” And now she suddenly finds something, she gets really excited because it is twenty-five. She says, “Grandma I can get this, it is twenty-five.” And I said, “Eva, honey, you cannot because there is tax. So with your twenty-five card you are going to have to look at something that maybe is twenty-one dollars. Then you can pay the tax and you will get a little change left over.” She kind of looks at me, and I said, “Yeah that is how it goes.” I like children to have an allowance young because an allowance is the first money management tool that a child is going to have. And I want that allowance in three parts, that part that they spend, a part that they save, and a part that they give to charity. You have got to set some limits, it just does not come because it is asked for and demanded, because at a very early age kids can understand about limitations. If you are a wealthy family you cannot really say we cannot afford that, and I do not believe in lying. But you can say to a child that is not how we choose to spend our money. I want families to really separate between what a child needs and what they want. You know, a child’s need to be loved, to be encouraged, to be supported when they are doing activities, you know for you to be a cheerleader, you cannot do that enough. But all this “I want, I want, I want, I want,” that is what you put the limits on and you do not give in to “I wants.” You know, “I wants” go on a wish list and you visit that wish list, you know, at the holidays or a birthday, limited times, because kids nowadays have way too much stuff. And so we wonder why kids feel entitled, it is because they have no ability to kind of gauge limitations.