How to Raise a Millionaire – Child Rearing Issues Money Can Cause
If you are reading my efforts, you probably want to become a millionaire or you already are one.
If you want to become one, and if you have children, you probably are trying to instill your values in your children – the values that are driving you to want to be a millionaire.
If you already are a millionaire, and if you have children, you may be wondering how you need to raise your children (or maybe your grandchildren) differently than you were raised – because they are being influenced by wealth in ways you weren’t.
To address these questions, I will be writing a series of posts (interspersed with posts on other topics) with ideas on how to raise children to be millionaires.
Money causes issues?
Maybe when you were growing up the only issue with money was the lack thereof. Now that you have been successful and have an abundance of stuff for your children, there should be no problem, right?
Not according to multiple psychologists and authors familiar with wealthy families!
There are 8.5 millionaires in the US alone (as of 2010) per CNN Money. Most of those are self-made millionaires – probably not raised in wealth. They have no model for what they need to do to raise healthy, wealthy children. They may have little knowledge of potential issues their wealth and their wealth creating lifestyles may bring to their children.
What are those issues?
According to Eileen & Jon Gallo – authors of Silver Spoon Kids, some of them are:
- Parents tend to overindulge their kids causing a focus on materialism.
- Parents may have tendencies to overload children with activities & pressures to ‘be the best’.
- Kids may develop a feeling of entitlement – because they are given everything they could ever desire or imagine.
- Kids can end up having a lack of motivation with little desire to achieve – after all, why should they try when everything is given to them, or any difficulty they encounter is solved by buying their way out of it.
- Children not realizing that others in the world live much differently than they
- Kids that snub other children because they don’t live in as good of a house or have clothes as nice as they do.
Thayer Cheatham Willis in Navigating the Dark Side of Wealth, found that some inheritors grow up without gratitude, appreciation or humility. They experience guilt, self-esteem, relationship, motivation, self-discipline and work issues – even as adults – due to the family wealth.
She noted that in a lot of wealthy families, those who inherit don’t ‘grow up ‘ legally and financially, saying that “A primary challenge of inheritors is to develop an understanding of the nature of the wealth for which they are responsible”. Yet parent’s often shield their children from knowledge of the type and extent of the family wealth – so the kids won’t blab it or so it won’t affect them growing up. In addition, understanding the family wealth is more complex since it may be invested in a wide variety of asset types, structures and geographic locations.
Wealthy teens and young adults need to think through how they would respond to requests from peers for loans, gifts or requests that they pay for everything done with their group.
Self-esteem issues can surface if the children aren’t allowed to meet and overcome their own challenges. Each child needs to find their own place in the world– a role only they can fill.
Parents who are wealth creators may have an especially hard time parenting. They are typically engrossed in the actual wealth building process, may spend little time at home with their own children, may outsource the care and education of their children to others and typically want their children to behave so as to reflect well on their own new found wealth status.
In addition, some of the forces that shaped those parental values are not present in their children’s life. Parents may have learned that their contributions to family were important and necessary. Their Mom and Dad were hard at work to provide sustenance, the chores the kids performed may have been integral parts of the household work. In a wealthy family, chores may be performed by hired help – so how do the kids learn to feel needed – to have a sense of belonging and competence?
What are child rearing challenges wealthy parents may handle differently than the rest of us?
Erik Erikson (a psychologist who developed a famous theory about the stages of development) identified 5 stages of child development.
In stage one at around age one, the child learns to trust others by being cared for by them.
Wealthy parents may endanger development of that sense of trust by:
- not personally spending time with the child
- always be preoccupied or distracted when with the child
- stimulating the child too much – not responding to the child’s emotional clues and
- switching care givers too frequently – so the child has no consistent person to rely on (not the parent or a consistent care-giver).
In stage two, around ages two – three, Erikson says that the child develops a sense of separateness and autonomy.
Wealthy parents may endanger development of that by:
- not being willing to let the child take minor risks
- wanting to rush in and do everything for the kid or
- letting nannies over supervise the child.
In stage three, at around ages 4 -5 – kids start to develop initiative – by starting, carrying through and finishing a task (such as solving a puzzle, etc). At this age they also begin to understand concepts (like compassion, opinions, ideas) and develop a sense of right vs. wrong.
Parents slow development in this stage by:
- not practicing what they preach (“Be honest” – but not if it means we lose sales)
- not letting the child initiate and follow through on things (the parent focus is on the final product instead of the process – and wants the product to be perfect)
- being too hard on the child when they try something new and fail (making them feel guilty when they fail) or
- not teaching the child how to deal with frustration or not letting the child work through their own issues (having all the kids over to your house because you have the pool, instead of letting your child develop their own set of friends).
In stage four, from about age 6 to puberty, children (according to Erikson) are busy developing a sense of industry. They want to be useful, work together to get stuff done, make things themselves or figure things out themselves.
Development of industriousness in the child can be harmed when:
- kids compare themselves to other kids and decide that they don’t need to be industrious because they have a lot of stuff– causing school grades to suffer and resulting eventually in inadequacy
- parents are tempted to buy them everything they want or need
- parents brag about what they have that others don’t
- parents obsess about having the best of everything
- parents reassure kids that they don’t need to worry because “we have plenty”
- parents too busy to be interested in the child’s homework
- parents set goals for the kids without the kid’s input or
- parents do homework for the child.
The fifth and last development stage Erikson identifies is adolescence – when the child defines their own societal role. All kids can become confused about who they are or want to be, but wealthy kids have extra things to worry through such as: Do they like me for myself or for my money? Who am I without my family’s money? Can I survive without my family’s money? Can I be as successful as my parents?
Parents can further this confusion if they:
- don’t talk openly and honestly to kids about money
- link the child’s worth to having money or
- measure adult achievements only in terms of money.
Read our summaries of the below books on raising wealthy children at: familymoneyvalues.com/2011/03/books/
- Navigating the Dark Side of Wealth – A Life Guide for Inheritors By Thayer Cheatham Willis Copyright 2003 Published by New Concord Press
- Silver Spoon Kids How Successful Parents Raise Responsible Children by Eileen Gallo, P.H.D. And Jon Gallo, J.D. Copyright 2002 published by R.R. Donnelley and Sons
- Estate Planning for the Healthy Wealthy Family – How to Promote Family Harmony, Affirm Your Values, and Protect your Assets By Stanley D. Neeleman, J.D. Carla B. Garrity, PH.D and Mitchell A. Baris, PH.D. Copyright 2003, published by Allworth Press
- Children of Paradise – Successful Parenting for Prosperous Families by Lee Hausner, Ph.D., copyright 1990, published by Jeremy P. Tarcher, Inc.
- The Golden Ghetto by Jessie H. O’Neill, copyright 1997, published by Stanton Publication Services, Inc.
- Raising Rich Kids by Gerald Le Van, copyright 2003, published by Xlibris