Steve is a “trust baby.” A trust had been set up for him before he had even learned to walk. All his life, he got everything he wanted without having to think about the cost. He went to elite private schools, got a brand new Jaguar when he was sixteen, and attended an Ivy League college that was completely paid for by the trust.
When he was twenty-one, the trust funds became available to him without restriction. He had hundreds of thousands of dollars, so he didn’t have to work.
Unfortunately, he spent all of his trust money. He’s fifty-three now and is making a living as a house painter earning $12.50 an hour. It is the only work he can find to support himself. Physically, he will not be able to do this work much longer. He has nothing to fall back on, no retirement, no emergency funds. He is living a subsistence lifestyle.
Without ever knowing boundaries in his life, without ever being denied what he wanted, Steve was unprepared for reality—having to make his own way and living within his means.
By giving your children everything they desire, failing to set clear boundaries, and refusing to say no, you are likely to make your children more dependent on you and others. They will be less apt to solve their own problems, earn their own rewards, and mature normally. When the inevitable day comes that they get in trouble, they will likely turn to you, expecting the helping hand that has been there all their lives.
As an adult, Walt was never very adept at managing money. Except for the red Schwinn bicycle, everything else in his life had been given to him. Ironically, he became an accountant, but found himself in constant debt. He eventually left the formal business world to take up a career in filmmaking and theater. It was during this time that his dad won the Washington State Lottery.
Try as he might, Walt could not shake the belief that if he got in trouble, his dad would bail him out. He even felt resentful when his dad began to refuse his requests for support. This dependency was so deeply ingrained that it took him well into his late thirties before he was able to let it go.
Make the boundaries clear to your kids. Tell them, “I can afford to get you this pair of roller blades. If you want that other more expensive pair, then you’ll have to help make it happen.”
Allow your children to participate in the choices about how to spend money and the reasons behind them. Let them know what it costs to run a household.
Tell them, “Okay, you want an iPhone. You want a guitar. You want every new X-Box game under the stars. You want a clubhouse in the back yard. Here’s how much money is available. You decide which of these things you want most. Or maybe you want to save this money and go to Disneyland next spring. You decide. It’s your choice. But you can’t have it all—unless you want to earn the money to pay for it.”
Going through this process will teach your children important lessons they would not learn if everything were just given to them. We don’t include our children in financial discussions because we don’t want them to worry about money, but including them makes them feel more valued and respected. Don’t you sometimes harp on your kids to be more responsible? Involve them in family financial planning, and observe the result!