The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money

by Ron Lieber

I didn’t used to give money to people who asked for it on the street, but a commenter on a blog post I wrote for The New York Times’ website caused me to reconsider. “I really don’t care what they spend it on, and I don’t care if they’re conning me or whatever,” the commenter said. “I really do care about teaching my son compassion and empathy for others. That’s worth the spare change.”

Now, if I’m with my daughter and someone asks us for help, I look the person in the eye, say “good luck,” and hand over a bit of money. “To ignore the homeless guy is to teach [kids] to ignore other people who are hurting,” as Eileen and Jon Gallo put it in their book Silver Spoon Kids.

If the choice is a zoo or a museum or a school or a shelter, call up the development office and ask if they’d mind accepting a donation from a child in person. My daughter decided to give six months of her accumulated Give money to a nonprofit that raises money for research on hearing loss. Her cousin is hearing-impaired, and I’m not sure I’ll ever forget the look on my sister-in-law’s face when my daughter handed over the money. Hopefully, my daughter won’t either.

When the family moved, it took two trucks to transport their belongings. Only one made it to Arlington Heights. The second was for things they gave away. And this is the framed maxim that the Solimenes chose to hang on the kitchen wall: “If you want to feel rich, just count all the gifts you have that money can’t buy.”

The explanation for all this can collecting, it turns out, is just basic economic behavior. Kids like to work and enjoy earning money; we just don’t do a good enough job of encouraging their industriousness and helping them find new ways to earn.

The lessons need not always be quite as heavy as this. One good reason for kids to hang out with people who are different from them is to realize that nobody has a monopoly on happiness and that it’s often great fun to slip into a world that is not like your own.

Most of us aren’t wealthy enough to vacation regularly at the Four Seasons or the Ritz-Carlton. But for the parents who can afford to leave town in high style for every major vacation, there is often wariness about the expectations such trips set up. Such a feeling crept up on Stephanie Joss when she heard her two children, ages 8 and 10, comparing the merits of various Four Seasons resorts.

For every week you’re at a resort try to take a day or part of one to get away from it. Figure out what local families do, and go do that. Maybe it’s the biggest playground or the most popular public pool. Farmers markets and other open-air bazaars offer all sorts of adventures; find food that no one in the family has ever eaten before, and persuade everyone to try it. Look up the local team that plays the most popular sport, and attend a game. Take the cheapest form of public transportation to get there.

As always, we’re in the adult-making business here.

fortune. Having more than enough money is a great thing. What we don’t want, however, are children who have no curiosity about people who are different from them and no understanding of what it might be like to have less. We’re trying to imprint sensitivity and a lack of presumption that everyone is alike in their resources and the choices available to them.

Still, no parent ever wants their child to hurt another in this way. As I raise my own daughter, I think about this story often because someday, my daughter may be the friend with the lunch money. I want her to know what the right thing to do is, instinctively.

Still, there is one crucial question that applies to nearly everything we’ve considered so far. In fact, it’s one of the central questions of human happiness, productivity, and prudent financial planning, whether you’re Bill Gates or down to the last dollar each month: How much is enough?

But at the same time, as economist and parent Joshua Gans has noted, kids are acutely aware of the fact that the one economic law that most directly governs their lives is one of scarcity: There usually isn’t enough to go around.

We can’t have or do everything we want, and it’s a lesson we need to remind our kids of often. Even if there is enough money, there’s not enough time. At its root, the question of how much is enough is reflected in choices we make nearly every day. And many of these choices are trade-offs.

Managing trade-offs, he discovered, was at the core of organizational success. One example that stuck with him was that of a successful bank that decided to do just three things well: checking accounts, savings accounts, and customer service. It traded off higher potential profits in loans or serving business customers in exchange for the money it could make serving more consumers better than other banks. Another such model is Apple, a company that’s chosen to compete in just a handful of product areas when consumers would no doubt try whatever other electronics it chose to manufacture.

Good living, he soon realized, is also about making good trade-offs. One of the most basic and yet emotionally complex trade-offs for adults is spending less now in order to have more money later. He wanted his kids to be considering that trade-off at the earliest possible age.

So to create what he hoped would be an exciting alternative to consumption, he started a bank at his house (and on a Google spreadsheet) that pays about 20 percent in annual interest. That’s enough so that when he credits it to the accounts each Sunday, even the kids with the smallest balances can see the number go up. Word got out in the neighborhood, and about 20 children now have money on deposit at the First Kids Bank of Brookline. One...

Engelhart has no problem with his children, the oldest of whom is 7, buying the things they want. His desire is simply that it be a considered choice. “It’s changed the conversation around spending,” he said. “Buying stuff is great but not buying stuff is also great, because you have the benefit of growing the money. So when they get a birthday check, their first instinct now isn’t necessarily to go out and buy something...

The Engelharts have introduced trade-offs into other aspects of their children’s lives as well. The family has established a toy equilibrium where any time a new one arrives on a birthday or through a purchase, an older one goes to the children’s hospital where their mother, Talia, works. The Engelhart children understand that they have enough toys and that overall growth in their collection probably won’t improve their lives all that much. So they think each time about which ones are...

This was a tough one: an experience they would enjoy versus a stroller that they would derive no benefit from. But his 7-year-old daughter informed him that the wheels don’t lock the way they are supposed to and that their babysitter has a lot of trouble with turning as well. She was thinking about how she could make her sitter’s life easier, and the inconvenience mattered to her. “I look for excuses to have these conversations because I think they’re so rich,” Yoni said. “It develops brain muscles that will serve them well in life, not just financially but certainly financially.”

We should look for these opportunities, too. How much is enough, and what should we trade off so that we have all the things we need and enough of what we want to make us as happy as possible?

That doesn’t mean we have to talk about money all the time. Smarts, kindness, loyalty, health—these things come first. “I want them to be interested, but not obsessed,” Engelhart explained. “I would be disappointed if this were the first thing they thought of each day.”

We have no idea whether our daughter will grow up to be a dancer or a banker. We have no control over how much money she will make. But we can influence how she will think about whatever she has by being honest about what we do with our own money now. She should know how to save but also how and when to splurge. She should know how to protect herself, too, from her own feelings about money and those of others who might manipulate her. It is an essential part of parenting, even more so than getting her ready for standardized tests or her driver’s license exam.