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

by Ron Lieber

The soda encounter proves a larger point: However much adults may enjoy having hotel attendants bring them strawberries and Evian spray poolside for a week or two each year, kids remember everyday experiences just as well, or even better.

The goal is not to make our children feel bad about whatever advantages they have or to shun those advantages as they grow older. Nor should parents feel as if they have to apologize to their kids or anyone else for their own good 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.

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.

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.

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? It’s a savings question when it comes to allowance. It’s a spending question when it comes to helping kids learn to buy things that will give them the most utility and joy. It’s a question of impact when giving money away and trying to maximize the good it does. When kids start earning, we want them to figure out how much they need and to what end.

As I’ve gone about my reporting these last few years, friends and strangers have often asked me about the single most important thing I’ve learned. Turns out it wasn’t a parenting tip per se. Instead, it’s the enduring power of gratitude to give us perspective on our lives and make us happier overall.

Shouldn’t we exercise some control over what they use their spending money for? Just a little? No. Let them fail. As long as they are not buying things or using money to do things on your banned list, then this is all just part of the learning process. Do try to engage them later, though, on the question of whether the spending was worth it. Particularly if there are other things that come up that they want to buy or do even more that they no longer have money for. Regret is a good feeling in this context, and the more searing the better. It can help them avoid making bigger mistakes later, when they are living far from us and the consequences will be greater.

A conventional adult financial life requires comfort with risk. The majority of undergraduates have to borrow money to attend college; there is a risk that you might not be able to pay the money back. Buying a home requires an even larger loan, which comes with its own risks given the length of the commitment. Most adults cannot save enough money for retirement without investing at least some money in stocks, which come with the risk that the stocks may fall a fair bit in the short term and not have the kind of long-term returns that they have had historically. There is risk in the workplace too, of failure and firing and, for entrepreneurs, losing a fair bit of whatever money they may invest in the business themselves.

So what is the best way to expose our kids to financial risk and, yes, loss? We want them to feel it, but not feel like failures because of it. We want them to both win and to lose.

When our kids were born, in 2007, 2008, and 2012, their grandparents each gave them $5,000 for us to invest in a single stock on their behalf. We picked different stocks, and the stock market has been pretty tumultuous since then, so the children now have very different amounts of money. One of the kids ended up in a particularly good stock and now has $20,000 more than either sibling and at one point it was $30,000. Should we equalize it to make things fair? No. This is part of the risk conversation. Life is not fair, the stock market is not fair, and so much depends on both what you invest in and when. But I’m not sure this is a lesson that I would share with the kids now or anytime soon, so keep the balances (and the existence of the money) to yourself for now.

Probe, but do not condemn unless you see patterns that lead you to think that kids value their possessions more than their relationships.