Per­ils of wealth: Why spoil­ing your kids can hin­der success

Ottawa Citizen - - FINANCIAL POST - RICK SPENCE Rick Spence is a writer, con­sul­tant and speaker spe­cial­iz­ing in en­trepreneur­ship. rick@rick­spence.ca Twit­ter.com/Rick­Spence

With sum­mer of­fi­cially un­der­way, you may al­ready be hear­ing the plain­tive nag­ging of your chil­dren. Gems like “I need a new bi­cy­cle,” “Why can’t we go to Banff (or Bar­ba­dos) like ev­ery­one else?” and the clas­sic “We’re gonna need a big­ger boat.”

More than any­one, en­trepreneurs are the peo­ple most likely to go from jeans to Jaguars in one gen­er­a­tion. In fact, it’s that need to prove them­selves to the world that drives many en­trepreneurs to suc­ceed. But how to do you keep your kids’ feet on the ground when they know you can af­ford match­ing jet skis?

Richard Watts, Cal­i­for­nia-based per­sonal and le­gal ad­viser to the su­per-wealthy, has a sim­ple mes­sage to par­ents who want their chil­dren to share their hard­scrab­ble, penny-wise val­ues: Stop spoil­ing them. Make them work for what they want. Or as Watts says, “For ev­ery­thing you give your child, take some­thing away.”

In more than three decades of work­ing as a fi­nan­cial ad­viser to the fa­bled one-per­centers, Watts has dis­cov­ered that af­flu­ent fam­i­lies live on the edge of cri­sis. It’s nat­u­ral for par­ents to want to sup­port their chil­dren. Why not give them an Audi for grad­u­at­ing, or money to avoid the crummy apart­ment in a bad part of town? But Watts sees such in­ten­tions back­fire, by cre­at­ing a cul­ture of en­ti­tle­ment that leaves the chil­dren di­rec­tion­less, lack­ing es­sen­tial ex­pe­ri­ences or the gump­tion to per­se­vere.

“It’s coun­ter­in­tu­itive not to give to our chil­dren,” writes Watts in his new book, En­ti­tleMa­nia: How Not to Spoil your Kids, and What to Do if You Have. “But how much giv­ing is too much? The unique­ness of our chil­dren will never emerge if we con­tinue to pro­vide them with the an­swers to prob­lems they need to solve them­selves.”

Watts didn’t learn about the per­ils of wealth just by watch­ing clients’ fam­i­lies fall into tragedy; he learned a lot as a fa­ther to three boys (now all grown). He opens his book with the saga of Rus­sell, his third-born, who, like many youngest chil­dren, got an eas­ier ride than his sib­lings. Where his older broth­ers were given only mod­est al­lowances and kicked out of the nest af­ter their first year in col­lege, Rus­sell was granted a credit card through univer­sity, and came home af­ter grad­u­a­tion while launch­ing a ca­reer in com­mer­cial real es­tate.

Watts chafed at Rus­sell’s spend­thrift ways (in col­lege, he bought a US$500 cap­puc­cino maker, ra­tio­nal­iz­ing that it would save him money), and burned at Rus­sell’s pre­fer­ring to party and buy new cars rather than leave home and be­come self-suf­fi­cient.

Af­ter two stress­ful years, Watts told Rus­sell it was time to move out.

He would pay half of Rus­sell’s rent for six months, but af­ter that: “You are on your own, for­ever … When in­vited, you may visit our home to share a meal, or spend an oc­ca­sional af­ter­noon. Oth­er­wise, you will stay away from our house.”

Feel­ing re­jected and scared, Rus­sell moved out. He had a hard time liv­ing on his in­come; he had to can­cel his health in­sur­ance to pay for food and shel­ter.

But two years later, he told his dad he was fi­nally on track. Now, Rus­sell says proudly, “I re­al­ize I have the abil­ity to work through things like this past year, and what­ever may come in the fu­ture.”

Watts was so pleased that he was tempted to give Rus­sell money to pay down debt. Then he re­al­ized there was no need to “save” his son. “He wasn’t suf­fer­ing. He was learn­ing. He was ac­tu­ally en­joy­ing his life more than be­fore. He was di­rect­ing his own path.”

But Rus­sell got the last word when he said, “I’m won­der­ing why you didn’t start help­ing me with this a lot ear­lier in my life.” Watts notes: “It was time for dad to ac­cept per­sonal re­spon­si­bil­ity.”

En­ti­tle­ment is al­most al­ways the par­ents’ fault, he says. When we try to pro­tect our chil­dren, “we are also steal­ing from them. We’re steal­ing the strength and con­fi­dence that is forged when they suc­cess­fully over­come a strug­gle or chal­lenge.”

Among the ad­vice he of­fers con­sci­en­tious par­ents:

Don’t consider your chil­dren ex­ten­sions of your­self. “Take the fo­cus off your ex­pec­ta­tions. Dis­cover theirs. De-em­pha­size the im­por­tance of pos­ses­sions, brands and lux­u­ries.” The pay­off? “There are few things as re­ward­ing as want­ing less.”

Teach­ing pa­tience and de­layed grat­i­fi­ca­tion is hard. Set a good ex­am­ple by elim­i­nat­ing your own

How would you ex­pect your chil­dren to learn re­straint from some­one who is not re­strained them­selves?

car pay­ments or credit-card debt. “How would you ex­pect your chil­dren to learn re­straint from some­one who is not re­strained them­selves?” To show your love, don’t shower your chil­dren with money or things. Cre­ate mem­o­ries in­stead, through spe­cial trips or per­son­al­ized ex­pe­ri­ences they’ll never for­get.

Watts says the worst of­fend­ers are of­ten en­trepreneurs. Self­made busi­ness own­ers reg­u­larly for­get that their own hum­ble roots gave them the skills and de­ter­mi­na­tion to suc­ceed. When they bring chil­dren into the busi­ness as sales­peo­ple or vice-pres­i­dents, they all too of­ten put them in well-paid “cages” that they don’t de­serve and can’t es­cape — all the while stir­ring up con­flicts with non-fam­ily staff who had to earn their po­si­tions.

“Let your chil­dren find their own pas­sion and ca­reer else­where,” Watts ad­vises.

“If af­ter­ward they elect to work for you, and you al­low them the con­trol and po­si­tion oth­ers say they have earned, it just might work.”

SI­MON DAW­SON/BLOOMBERG FILES

The worst of­fend­ers in spoil­ing their chil­dren are of­ten en­trepreneurs, which can cre­ate a cul­ture of en­ti­tle­ment that leaves chil­dren di­rec­tion­less, writes Rick Spence.

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