In my last post, I described what I have seen as a rise in spoiled and fiscally irresponsible brats among both wealthy and less affluent families. Several commenters suggested that it’s impossible to not raise spoiled brats in a moneyed family, in particular, because it is such an ever-present and influential force in these children’s lives.

Yes, I have known and worked with moneyed families (and those who aspire thus) who absolutely spoiled their children rotten and the kids are the worse for it. At the same time, I have known and worked with other families of means who raised children who were respectful, responsible, caring, and compassionate, and who were making real contributions to the world.

What distinguishes these two groups is not the dollar figure on line 37 of IRS Form 1040; both are large. The real issue is the values underlying the wealth and the relationship that these families have with money. In the former group, the accumulation of wealth is an end in itself. The riches are used for largely selfish purposes, specifically, conspicuous consumption, status, and power. In the latter group, wealth is amassed as a byproduct of passion and hard work, and with a grand purpose in mind based on their most deeply held values; the desire to use that affluence to enrich their lives and for the good of others. This money is used to express values such as education, travel, culture, and philanthropy. Clearly, the messages that children from each of these types of families receive about money are vastly different and they will have very different experiences with money and develop very different values, relationships, and practices with money. And these apply to both wealthy families and those with less means.

So, the question is: how can parents avoid raising spoiled brats and develop fiscally responsible children who have healthy relationships with money? At the heart of this issue is teaching children several essential values that impact their perspectives on money and provide them with real-life experiences in which they can learn to use money in a healthy way.

Perhaps the most basic value about money that children can learn is that it should not define them. Instead, who one is, how one behaves, and how one treats others, rather than, for example, what one drives or wears, should determine their value as people.

The value of responsibility is also highly relevant, namely, the notion that our actions have consequences and children must be held accountable for their actions, both good and bad. Yet, what is a better definition of spoiled brats than children who, whether they do good, bad, or nothing, they get what they want. Ironically, many parents who learned the lesson of responsibility early in their lives and that contributed to their success don’t seem to want to teach their children the same vital lesson.

And we can’t forget gratitude. As a commenter to my previous post noted, my distinction between being spoiled and being a spoiled brat may be a false one; spoiled is spoiled. Perhaps a better way to differentiate the two is to call the first group “fortunate,” in which these children actually see themselves as being the recipients of good fortune and feel real gratitude for what they are given. In contrast, the second group is “entitled” because they expect what they have been given and feel that it is their right. Certainly, two children can be given the same thing and Child A says “Thank you so much!” and Child B says “Is this all?” These divergent attitudes about money will undoubtedly express themselves in all aspects of their lives throughout childhood and into adulthood.

Children also need to learn that money, like most things of value in life, is earned rather than, as I just suggested, a right or entitlement. Lastly, as I indicated in my last post, other values and skills, including delayed gratification, respect, discipline, and decision making, also have a powerful influence on the attitudes and relationships that children develop around money.

Parents can communicate these values through discussions, teachable moments, and life experiences. But the reality is that actions speak far louder than words and parents must live those values if they want their children adopt them. And, of course, it’s an uphill battle when children walk out the front door and are confronted with a noxious culture of money that is trying to teach your children the exact opposite lessons, and peers and other families with different values and perspectives on money than their own.

This discussion of values leads into three practical strategies for raising children who are NOT spoiled brats: chores, allowances, and summer jobs.

Chores

One of the great lessons that children need to learn, clearly missed by spoiled brats, is that there are no free rides in life (at least not the life that most of us lead). Everyone has jobs they must fulfill to ensure the effective functioning of a family or any group. One of the most powerful ways to teach children this lesson is for parents to assign age-appropriate chores that they must fulfill as members of the family unit or to earn extra money for themselves.

We gave our two daughters chores before they turned two years old: set the table (it doesn’t have to be Martha Stewart perfect), bring their plates to the sink (expect some dropped food and broken dishes), stack their books on the coffee table (no perfectionism here), put their toys away (piles are acceptable), and help take the garbage and recycling bins out to the curb each week (good for them to be around stinky stuff and to understand the value of conservation).

Allowances

Could there be a better way for children to learn fiscal responsibility than for them to have money of their own to do with it as they choose? Charles Dickens said it so well, “Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” Allowances are the place where that relationship to which Dickens alludes can be established.

My wife and I bought our now-five-year-old daughter a piggy bank when she was four years old that has four compartments: Save, Spend, Invest, and Donate. We give her an allowance of $2 a week in quarters and she must deposit 50 cents into each compartment. Every few months, she chooses a charity to donate that portion of her allowance. She also thinks about what “big-ticket” item she might want to save for. And when the Invest compartment gets full, we’ve promised that she can open a saving account at the local bank. When she wants to dip into Spend money, we use these opportunities as “teachable moments” to help her decide how much she will need to buy it, how important the item is to her, and whether it might prevent her from buying something else that she is saving for. We don’t, however, restrict her from spending her money no matter how much it pains us to watch her buy, for example, that pink plastic thingy that will be broken and forgotten within days (another teachable moment after!).

Summer Jobs

By the time children enter their teen years, they are getting scarily close to entering the real world (even if it’s just college, admittedly not very real for many young people, but a step in that direction). So, that is the time to really expose them to life in the real world through summer jobs. Unfortunately, summer jobs seem to be a dying breed these days for many children as more and more parents, particularly those who are affluent or aspirational, worry too much about their children’s futures. In response to this anxiety, they send their kids to summer academic camps (doesn’t computer camp sound so fun?) or internships (e.g., law firms, hospitals, businesses) that they think will better prepare them for college or career.

But “real” summer jobs are one of the most powerful experiences teenagers can have and offer benefits far greater than the resume-burnishing summer jobs that so many teenagers are being forced into these days. I think manual or mundane labor is an especially good learning experience for teens, particularly in the privileged and insulated world in which many kids are now raised (nothing like ten-hour work days, boredom, blisters, and a sore back to give teenagers some perspective).

I worked as a carpenter all through high school and college and its impact on me was immense. I discovered the value of hard work and the direct relationship among my efforts, producing something that did not exist before, and earning a wage. I also learned how the “other half” (or three quarters) lived; what was a summer job for me was a full-time vocation for most people in America. Plus, I learned a set of practical skills that I use and get great joy from to this day (my motto: I fix most things, but I don’t guarantee my work!). My wife worked summers in a mall cookie shop and gained similar benefits.

Parents feel so much anxiety these days about their children’s futures, particularly their financial futures. Whatever else parents do (and, by the way, most of their efforts seem to be misguided), teaching children healthy values, attitudes, and skills related money and fiscal responsibility are some of the best things they can do to ensure that their children are prepared for whatever lies ahead in this uncertain world in which we will live in the next few decades. And raising children who are responsible, hard working, and considerate, rather than spoiled brats, is icing on the cake.