Teaching Children With Rich Parents to be Productive

January 10, 2005

I know a number of rich couples whose children did not succeed. I've even seen some of these children squander all their parents' money even before their own sons and daughters could enjoy some of it. It's a sorry state of affairs, but it happens. Thus, if you want your wealth to be passed on to the next generations, don't just accumulate them; teach your own children as well to take care of family wealth.

According to the book "The Millionaire Next Door," which was authored by Dr. Thomas Stanley and Dr. William Danko, there are ten (10) rules to follow if you want your children to learn the value of hard-earned money. Their rules are paraphrased below.

1. Don't let your children know that you are wealthy. Aside from not telling them directly that you are rich, don't show them how to live a high-status or high-consumption lifestyle. They would love to emulate this lifestyle when they reach adulthood, so don't give them any ideas. Also, you wouldn't want them to feel that they no longer need to study or work hard because dad can take care of them forever.

2. Teach your children discipline and frugality. Let them know that life is not a bed of roses, so they need to be tough. Don't let them waste anything - water, energy, food, and their material things. Make them follow rules so they'll know early on that they need to adapt to a lot of rules in order to succeed. Teach them to have self-confidence and never to feel sorry for themselves. These can only be taught by example, so you yourself must demonstrate these virtues.

3. Let your children establish a mature, disciplined adult lifestyle and profession before letting them benefit from your affluence. Giving them excessive cash to spend while they haven't made something out of themselves yet will distract them from the real business and instead pull them towards a leisurely and high-consumption life that they can not sustain on their own.

4. Minimize discussions on what each child or grandchild will receive as inheritance or gifts. More importantly, never make any verbal promises of what a person will get from you, especially if there are other people who can hear them. Aside from reinforcing their tendency to be dependent on you, such words can be a source of major conflicts someday.

5. Never give cash or any gift of significant value to your children when negotiating with them. This will give them the idea that mom and dad can be pressured into giving them cash whenever they need it. It can also be misconstrued as a bribe, or as an item given for appeasement or relief of guilt. Of course, there would be times when giving money is the right thing to do. Parents should be able to distinguish these from situations wherein it is ill-advised to do so.

6. Stay out of your adult children's family matters. They're your children, but once they're no longer children they're on their own. Meddling in their affairs or any other form of interference will be detrimental to their sense of independence and responsibility. In "The Millionaire Next Door," it is said that you should even ask for permission before giving your children an unsolicited piece of advice or an expensive gift.

7. Don't try to compete with your children, especially in terms of money matters. You know fully well that they can't and wouldn't want to compete with you. Thus, statements like "when I was your age, I already had this much money..." are taboo. Children must be taught not to crave for money, but to achieve self-esteem through a good education.

8. Always remember that none of your children are the same, so don't demand that they achieve equal levels of success in life. Providing excessive financial help to the underachieving ones can weaken them further and probably trigger conflicts. Just help them find the motivation that they need to turn them into achievers in their own playing fields.

9. Emphasize your children's achievements, no matter how small, not the material tokens of success. Praise them for their contributions and appreciate them for their strengths and good values. Never measure them in terms of what they buy, or what car they drive, or how much they spent on something.

10. Tell your children that many things are more important than money. And this is the truth, of course. Good health, peace of mind, a loving family, true friends...just to name a few. Add to this list the following: a good reputation, respect for and from others, integrity, honesty, and a sense of fulfillment and accomplishment. These are things that would give you genuine inner happiness.

Raising children is not easy, even if you're affluent. You must teach them to stand on their own feet, even if you can be their crutch. You'll be doing them a great disservice if you'll make them fully dependent on you, since that would make it impossible for them to achieve self-esteem and genuine happiness.

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