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9 Ways to Avoid Spoiling Your Children with Money

As Financial Services professionals, we want our children to benefit from—not be hindered by— the wealth we create, but we’re often flummoxed as to what to do. For those of you who are concerned about the impact of wealth on your children, Trisha Murphy Rae, LCSW, offers these nine tips:

  1. Show your children there are solutions other than money. “When children see problems primarily being solved using money, this becomes their sole view of the world,” says Murphy Rae. Translation: stop bribing them with money.
  2. Learn to say no. “If given everything they want, children cannot learn the values that they will need to succeed,” Murphy Rae advises. “Your job as a parent is to prepare your child for real world, where you don’t always get what you want.”
  3. Murphy Rae urges parents to talk openly about money. Take every opportunity to tell children why you choose a purchase or an investment; help them understand value, cost, risk and how to respect money like you do.
  4. Lead by example. Volunteer time and effort to a charitable project, rather than simply writing a check. “Show your children how to effect change through effort,” says Murphy Rae.
  5. Seek opportunities for you children where they can start at the bottom. According to Murphy Rae, “Parents do a great injustice by constantly giving their kids a boost. Children need to learn to struggle on their own.”
  6. Entitlement is ugly and destructive and occurs when “when children grow up feeling they have a right to a certain standard of living without putting in the work,” says Murphy Rae, who suggests parents build responsibility in children early in small ways, such as having a child pick up after themselves, clean their rooms, or participate in household chores.”
  7. Give them an appropriate allowance, and nothing more. “With a finite amount to spend, they learn that money is a limited resource. Without access to ‘more’ they will learn to budget and save for things that are meaningful to them.”
  8. Give them perspective. Wealth isn’t forever. Teach about your humble beginnings, or those of your parents or grandparents, and how—most importantly—money is transient; character is permanent.
  9. Murphy Rae advises everyone to take a hard look at their relationship with their children. “Your child won’t experience unconditional love if you have a relationship based on material goods.”

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