Day 8 of 40 Days to Make Your Money Count

Day 8 of 40 Days to Make Your Money Count Don't Handcuff Your Kids with Handouts "One must work and dare if one really wants to live." - Vincent van Gogh We love our children, and we want to show it. Some of us show it by giving them lots of money, but the effects can be quite the opposite of our intentions. Instead of providing wings for them to fly, those funds handcuff them to the ground. Not all gifts of money shackle our children. We can use gifts of money to stimulate responsibility. For example, some parents offer to match dollar for dollar the money their children earn toward buying a car. That can have a very positive impact on a young person by teaching the fact that discipline and hard work yield rewards. Too much of a good thing—large gifts without expectations of responsibility—can genuinely harm our kids. In their study of millionaires, Stanley and Danko made a number of observations about parents who give money to their children. In retrospect, these conclusions seem to be obvious, but many wealthy parents don't realize the negative impact they have by giving too much. Stanley and Danko found that receiving cash gifts produces kids whose lifestyle is characterized by consumption rather than saving and investing, and these kids become emotionally and financially dependent on their parents, often well into adulthood and until their parents die. * [Thomas J. Stanley and William D. Danko, The Millionaire Next Door, (Simon & Schuster, Pocket Books, New York, 1996), pp. 153-159.] Why do some parents give their kids too much? There are several possible answers. Some parents experienced hardships when they were young, and they simply want to protect their children from those difficulties. Other parents feel guilty that they haven't been the mothers and fathers they know they should have been, and they try to compensate by giving cash and presents. Similarly, some parents try to buy their children's love, or they may try to use money and lavish gifts to make their kids happy. The questions we need to ask are: —Am I giving money or things primarily for them or for me, to make me feel better as a parent because I've blown it so badly? —Will this gift build or destroy my child's sense of independence and responsibility? In some cases, parents who have been giving too much to their kids for a long time have developed children with a debilitating, deep-seated dependence. Changing course at this point requires far more courage and communication than would have been necessary if they had changed directions earlier, but it's still worth it. It's never too late to wean a dependent child from his parents. The process may be painful, but it simply must be done if you want your children to become emotionally healthy adults. Ultimately, personal maturity, growth, and wisdom are stunted in young people who receive too much from their parents. Self-absorption ruins relationships, distorts purpose, and crushes drive that leads to achievement. Irresponsible adult children—that's not a legacy any of us want to leave to our families. Teaching our kids some of these small steps early in life has a huge payoff for them and for us. Visit FamilyWealthBootcamp.com to learn more about our Family Financial Fitness Challenge for 2019.

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Day 8 of 40 Days to Make Your Money Count is an episode from Made in Texas by Jim Munchbach, Certified Financial Planner™.

This episode is 21:36 long.

This episode was published on Dec 14, 2018.

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