A common desire among parents is to give their kids a better life.
We pride ourselves on being able to give our kids whatever they want as proof of our love and ability to provide for our family. This seems innocent and what every parent should strive for – right?
The intent is certainly understandable, but the outcome can be a mixed bag. I've been a Certified Financial Planner for more than 20 years and many times I have sat down with distressed parents who inadvertently created entitled kids. Their kids left home ill-prepared to manage their finances because they were simply used to being handed everything and expect Mom and Dad to continue to do so indefinitely.
It's very easy to look from the outside and say they should let their adult kids fend for themselves, and eventually they will need to cut the financial cord. At the same, it also much harder to watch your kids struggle and do nothing.
This is why I advocate so strongly for parents to talk to their kids about money when they are small, so when they leave home, they have the firsthand experience and confidence to make good decisions with their money.
3 Money Lessons to Avoid Creating Entitled Kids
Teaching kids about money does not rob them of their childhood. It helps prepare them to succeed as adults. Here are three important money lessons every child should learn.
Set Save, Spend and Share Goals
Goals act as our best defense against mindless spending and playing “keep up”. My girls have set individual save, spend and share goals every year since they were six years old. Every time they earn or receive money, they immediately allocate it to their goals. They have learned to slow down when they discover a new toy and decide whether it is more important than their goals. More often than not, they decide it's not worth delaying goal achievement and walk away without feeling deprived.
Success Tip: Make sure the first share goal is something tangible, so they can experience how good it feels to share. My daughters LOVE to share because it makes them feel so good to help others. Often times, the first goal they exceed is their share goal, and they choose to share more than 10% of the money they receive.
Money is Earned, Not Given
Allowance is always a hot topic among parents, and I am not a fan of a traditional allowance where money is just given for no reason. My girls earn money through a weekly job chart I post. They can choose which jobs to take, so they can earn as little or as much as they want. If they do a poor job, they may get paid a reduced amount or not at all. On the flip side, they can earn the occasional bonus for doing an exceptional job.
My girls really love this system because they control how much they earn. Mom loves it because now they ask me for more ways to earn money when they find something they want, instead of begging me to buy it for them.
Let Them Make Money Mistakes Now
One of the hardest things to do as a parent is watch your child struggle and make a mistake, but I would rather they make a small mistake now than an expensive one as an adult. It's important for kids to experience the consequences of their money mistakes and learn how to recover from them too. Now they will have the skills and confidence to be nimble on their feet when mistakes happen as adults.
These money lessons help minimize the chances of creating entitled kids who depend on you instead of themselves as adults. Now you have truly given your kids the tools to create a better lives for themselves. And that is real parental love.
Making Money Conversations Fun and Easy
Financial literacy is my passion, and it is easy for me to talk to my girls about money, but I know it's a struggle for some parents. One easy and fun way to help you start these important conversations and shape how your kids think about money is through my children's picture books. I'm pleased to offer Making Sense of Cents readers an exclusive coupon code TOUR3114 for $3.00 off my new book, The Lemonade Stand. Join Lauren and Taylor in their continuing money adventures as they teach their friends, Ryan and Christopher, how easy it is to save, spend and share.
About the Author: Shannon Ryan is a Certified Financial Planner and a Mom on a mission to help busy parents teach their children simple, value-based principles that guide their money decisions and support their long-term financial well-being.
The Lemonade Stand – iPad Mini Giveaway
July 14-31, 2014
Brought to you by The Heavy Purse
Co-hosted by Are Ya Gonna Eat That, Broke Millennial, Budget and The Beach, Budget Blonde, Budgeting for More, Busy Mom Budgets, Cash Cow Couple, Cents and Sensibility, Club Thrifty, Color Me Frugal, Debt Debs, Debt Roundup, Disease Called Debt, Eat Laugh Purr, Enemy of Debt, Eyes on the Dollar, Femme Frugality, Financially Blonde, Frugal Rules, Living Richly Cheaply, Luke 1428, Making Sense of Cents, Money Saving Dude, Monster Piggy Bank, Not Now Mom's Busy, Reach Financial Independence, Shoeaholic No More, Stacking Benjamins, Tackling Our Debt, The Broke and Beautiful Life, The Finance Girl, The Frugal Farmer, The Random Path, Thrifty Dad, VeegMama and Young Adult Money.
We're Giving Away an iPad Mini to One Lucky Reader!
Help us celebrate the release of The Lemonade Stand and join Shannon in her mission to increase financial literacy in both children and adults.
“Everyone handles money. Unfortunately, not everyone does it with confidence. Money has long been a taboo topic in many homes, which makes it even harder for parents to know where to start or what to teach. So I created a series of children books to help parents ease into these important conversations. Financial literacy is one of the most loving gifts you can give your children, and I encourage you to make money conversations a priority in your home.”
The giveaway runs from July 14-31, 2014 and is open worldwide.*
* A winner located outside of the United States will receive a cash equivalent prize via PayPal.
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its great that kids are taught how to use money when they are young. especially understanding the value of money
I agree! The earlier kids learn about the money and how to use it wisely, the better.
I have a seven year old daughter, I slowly teach her about money. It was so funny, I think she’s even more frugal than me. She didn’t want me to buy her a new pair of shoes because she said that she still have a shoe to use, until yesterday her shoes was broken and she can’t use it anymore. So I told her that I would buy her a new one, I let her chose, but she checked the prices first before giving it to me. 🙂
What a great story, Clarisse! It’s refreshing when kids care about how family money is used instead of “wanting”. My girls have gotten very good at deciding when something isn’t worth family or personal money because it won’t make them feel happy for very long. Kids get it when you talk to them about money.
Money was always an interesting topic growing up with divorced parents. My dad was incredibly transparent about his/our money situation. To this day, he always carelessly mentions how much his last paycheck was and he even gives me yearly updates on his life insurance…things like that. On the other hand, my mother rarely talks about money, it is a very taboo topic for her.
I like to think that I’m somewhere in the middle. And I’m comfortable here 🙂
My parents divorced when I was young too and it was very interesting two see how differently they both approached money. I am big on transparency (where appropriate) as I don’t want my girls to think money is a taboo topic in our home. Since they are still quite young, we don’t share everything with them, but we make sure they understand how we use our money on what we value. When we plan trips (which is always our family save goal) we explain how we decide to use the money, etc. and it definitely has an impact on them.
Great giveaway!
I love your book and ideas, Shannon! I make my kids earn money by picking up their rooms and play room. They only get a quarter at this point because I’m cheap! =)
Thanks, Holly! I wish I get by with paying my girls a quarter! LOL! They on the other hand would probably feel quite differently. 🙂 It’s great that your girls are already earning money and know it’s just not given.
What an interesting idea about creating entitled kids who turn into entitled adults! I loved this post Shannon 🙂 Thanks for sharing this with us Michelle.
Sadly, I see it very often in my financial planning practice. Parents who move heaven and earth to give their kids everything, but then their kids expect them to continue providing for them when they are adults. They spend mindlessly (and often recklessly) and wait for Mom and Dad to rescue them. And now their parents don’t know what to do. It’s hard. And just another reason why we make sharing a core family value. It’s a lot harder to feel entitled when you love to share.
I want my kid to learn about money as soon as she learns her ABC’s and 123’s
I did too, which is why I started talking to them about money when they were toddlers. I always say that I want my girls to know 4 quarters equal a dollar but I also want them to know how to use that dollar wisely. 🙂
Michelle – thank you for your support! I really appreciate it and hope you are having a wonderful cruise. 🙂
Thank you Shannon for sharing your great article and the fun giveaway! 🙂
My parents always were big about setting goals and making sure I saved my money to meet them. Even now I maintain that approach to finances and it has always served me well!
Financial literacy in kids is a huge deal. My parents worked really hard to make sure that we understand the importance of money. My boyfriend did not have this education, and I have suffered some of the consequences along with him!
I like your ‘money is earned, not given’ paragraph. My parents gave me the opportunity to do chores for money so I happily did them. They get stuff done – I get some money that to me seems like the world and to them seems like nothing. Everyone wins!
Always a hot topic in our house! 😉
my parents taught me the value of a dollar at a young age by making us responsible for any expenses (gas/oil/insurance) associated with driving. they showed us that every freedom (the joy of driving at 16!) comes with major responsibility to get there.
What a great giveaway! My parents took me grocery shopping from the beginning and we always talked about why they were buying certain items rather than others, coupons, etc. Start young!
My parents taught us about money by example. We saw them budgeting and saving while still making sure we had some for family fun.
The money mistakes made in the past are nothing more than mere learning experiences to “side hustle millionaire” greatness. I remember back in the 1990s when i used to trust friends and family and how I never got my money back. I trued my former friend I grew up with in Brooklyn when I came to South Florida and moved in his apartment. He got married and left me with his side of the rent and bills. And when his mother mailed the check to me to pay his half, he stole it out the mailbox while I was at work. He still had the keys to the mailbox and my apartment after I kicked him to the curb as a friend. I learned valuable money lessons. Growth is painful but it makes you stronger and a more sound minded [side hustle millionaire].