How to Raise Financially Smart Kids?

Tuesday, May and I had the privilege of being invited to hear a New York Times columnist and author, Ron Lieber, speak about his book, The Opposite of Spoiled Raising Kids Who Are Grounded, Generous, and Smart About Money. Ron was a very engaging speaker and highly endorsed a game with cards that was developed by our local community foundation, Central Carolina Community Foundation (CCCF) called Talk About Giving.

Some of Ron’s key points: We all have a moral obligation to teach our kids about money and how to find ways to 1) give to others, 2) save for the future and 3) have a balanced way to spend. Most families of privilege will often tell their children when they ask about money “It is none of your business.” This couldn’t be more wrong! His own work in this area began when his 3 year old daughter asked him, “Why don’t we have a summer house in the Hamptons, Daddy?” As he explained, none of us want to raise a spoiled child. In the therapeutic world, we have words for that like Affluenza, Narcissistic, and Entitled. It is hard to address socioeconomic class differences, but if we do not, our wealthy, over indulged children will not grow up to value many of the values we most desire, such as modesty, thrift, prudence, generosity, perseverance, grit, patience, curiosity, and perspective.

One of the audience members asked about grandparents indulging their grandchildren and without meaning to, contradicting what parents are trying to teach. Ron’s answer was great! Rather than giving children money, give them life experiences. Take them on a trip and spend time with them instead of buying them things. Our children are in a culture of immediate gratification. None of us wait to use the bathroom anymore, as houses now have multiple bathrooms. None of us wait to use a telephone and our houses are burgeoning with overfull closets of clothes.

How do we counteract the culture of get it immediately and charge it now? One recommendation in his book is called the “Dewey Rule” (Page 113 of the book.) If something is really “in” for a teenager and “everyone” is getting it, wait until 30% of the peers have whatever it is before giving in to buying the new fad item. Ron says that by that time, often the item is no longer the “thing” to have.

Ron also believes strongly that it is not in our best interest to tie family household chores (doing laundry, dishes, and mowing the yard) to allowance. He believes these are chores that need to be done just because a child is part of the family. Allowance should be used as part of a child’s education, much like art supplies or books. He recommends trying your best not to get into a power struggle about it or make it a huge moral issue, but rather use the allowance to teach about both good and poor decisions about the use of money. A child should be required to put a portion of their allowance into savings, a portion into giving to others, and a portion to be set aside for spending. By the time a child is 12 or 13, they should be given a budget for clothing. If they choose to buy fancy undergarments, it might mean getting wet if they did not buy proper rain boots. A little discomfort natural consequence for making a poor purchase can be a great learning lesson. Ron also says that you might have chores that are pure “drudgery” have dollar amounts attached to reward the child choosing this particular “nasty” task.


Ron talked about a private Jewish Day School that was totally fed up with the elaborate parties and gifts given in the community for children having their bat mitzvah or bar mitzvah. The school asked parents, family, and friends to start a fund for giving and used this large sum of money to help teach about donating to a meaningful cause. This practice in now in place in many schools around the U.S.

When I think about what we do at The Price Group, I think we certainly have to combat the very negative stereotype that all students who go to boarding schools are from “well to do” families. This perception is actually incorrect. While the cost of going to a boarding school has risen, many have large endowments and offer quite a bit of scholarship money so that middle income or lower income students can have the same opportunities, if they are motivated and bright and would add to the community of a school. When we go on school tours, we look very closely at the school’s culture. Do all students at a school get treated with respect and are they allowed to be different and still be accepted? What does the dress code and the extracurricular activities tell us about the school? And, even more importantly, how are the relationships between the students and the faculty? Are both students and faculty actively engaged in community service and is service and “giving back” valued?

We do indeed have a moral obligation to teach ALL our children about the value to giving back… our country’s founders believed in giving of their time and energy to the good of others and we need to make sure that as this digital explosion continues we do not raised spoiled, entitled kids. My favorite part of Ron’s story was when his daughter had saved her money in her “giving jar” for a year and walked into a charity and dumped her jar out on the counter. The adults at the charity took pictures, posted them on the website, and celebrated this small gift as if it was a six figure gift! All acts of charity (from the old French charite, in 1137, benevolence for the poor), is part of our heritage and a value that we need to instill in all our children!

“Hats off” and thanks to Central Carolina Community Foundation and Ron Lieber for challenging us to think about this very important topic!

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