Perils of wealth: Why spoiling your kids can hinder success
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.”