LEVATUS Wealth Advisor | Surprising Ways Wealth Impacts Children
You might be surprised at some of the ways wealth impacts children
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Children who grow up in an environment of wealth are the beneficiaries of a multitude of opportunities and options, opportunities loving parents are excited to share. Setting your child on a path toward a happy adulthood, however, is more complex. It requires paying thoughtful attention to the hurdles wealth can create as well.
Self Esteem
Kids with positive self-esteem feel confident, capable and generally good about themselves. Research shows that children who value themselves and their accomplishments are more likely to have a growth mindset, meaning they are motivated to take on new challenges and learn from mistakes. A key element of self-esteem is the feeling of earned success. Giving children too much (or open-ended) financial assistance can impede their development of a meaningful life strategy and rob them of the opportunity to capture that powerfully positive feeling of accomplishing something all on their own. Getting that first hard job that pays little can not only give kids a feeling of earned success, it can also be a window into signature strengths and personal interests, important inputs into future career and education choices.
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Generosity
My child isn’t generous. Should I worry? Growing up with wealth does not necessarily translate into generosity. Children’s receptiveness to learning and feeling the power of giving changes over the course of their young lives as they move through the different stages of cognitive development. In early childhood the brain is generally not ready for the complex topic of generosity, so it is not surprising that sharing toys does not compute! Late in the elementary years this changes though.
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Financial Readiness
Understanding the value of a hard-earned dollar takes practice. It is never too early to start talking to children about money, budgeting and saving. A piggy bank for early elementary aged children that is divided into spend, save and donate is one way to help young children start to understand the different roles of money in concrete terms (which is where they are in their cognitive development). As children get older it is important to reinforce that how much they spend, and how they spend it, matters. Setting up weekly chores around the house for which your child gets paid can help them understand the value of a dollar. As children approach middle and high school, using an online app such as FamZoo or Mint as a tool to help them set a budget and track cash flow reinforces that money does not grow on trees. All of this builds a foundation for when your child ultimately starts a career and becomes financially independent.
Photo by Matthew Lancaster
Career
Children born into wealth have tremendous advantages. Sometimes all the help along the way, however, can translate into a lack basic financial skills and occasionally a lack of motivation as well. Finding a fulfilling career requires ‘testing’ what you are good at, figuring out what the world needs, understanding where your passions and skills lie. This requires some hands-on trial and error. Many parents in affluent families don’t want their kids to have a job because they want them to focus on school, sports or extracurricular activities. However, work provides real life insights and a sense of accomplishment that often school and sports cannot.
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Help! Where do I start?
For LEVATUS clients the Children and Wealth Program runs from Newborn Planning through to Young Adult Career and Financial Coaching. Throughout the program there are common denominators - meet kids where they are developmentally when having discussions about money and think about financial planning through the lens of your child’s long-term fulfillment. At all stages of cognitive development children observe and absorb their parents’ actions. Remember there is value in sometimes buying the cheap seats and repairing something versus replacing it, even if you can afford to do otherwise. Capture the energy of experiences versus things as memories from experiences last a lifetime whereas things can be consumed and have a much shorter happiness impact. Think carefully about the right time to disclose details on wealth with your children. And finally, remember every child is different and every path to a truly fulfilling life will have different turns.
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