Too Much of a Good Thing
Apex mom Cat Lewis isn’t worried about her kids, ages 5 and 3, understanding money. A financial representative with Primerica, Lewis has a good sense for how to live within her family’s financial means and how to explain her financial goals to her children. She is passionate about fighting debt and helping other families embrace a lifestyle where values are more important than spending. Lewis learned this lesson the hard way. Several years ago, she was in a difficult financial place because as a child she got everything she wanted.
“I got involved with helping people with their finances because I was in dire straits myself. Daddy’s money went away, but my spending habits did not. I learned some hard lessons about money by going through some rough times. I know what it’s like to have creditors hound you day and night. I know what it’s like to have creditors call your neighbors on you. It’s embarrassing. And you feel like dirt,” says Lewis.
Lewis taught herself how to be responsible with money and, with some help from her husband (an undergraduate economics major with an MBA in finance), she became a crusader for helping other families get out of debt. Along the way, she opens their eyes to the lessons that their spending habits are teaching their children.
“It’s vital to teach kids the value of money and possessions,” says Lewis, “or they will be like I was when I young, spoiled and ungrateful. There’s no way to give a child everything material and not teach them to give to others or save for the future and expect they will be happy or satisfied in life. They will be discontented and ungrateful.”
Maryann Rosenthal, clinical psychologist and author of the new book, Be a Parent, Not a Pushover (Nelson Books, 2006), agrees. “We want more for our kids than we had for ourselves,” she says. “The problem is that all we think about are things other than emotional fulfillment.”
Rosenthal is concerned about the parents that she sees in her office who have no idea how to communicate with their kids other than by purchasing them whatever they want.
“The pace of our life is so hectic and so fast. So parents feel guilty and give their kids stuff to buy their kids’ love. Put away your wallet and spend time teaching your kids about money. If you take this time you can keep from raising a generation financially irresponsible adults,” says Rosenthal.
The results can be troubling when kids aren’t financially prepared for young adulthood. All too often, these fiscal shortcomings emerge when teens go to college. According to a study published in 2005 by Nellie Mae, the average outstanding credit card balance on an undergraduate’s credit card was $2,169; by their final year of school, 56 percent of students will be carrying a $2,864 balance. Of these students, only 21 percent pay off their cards in their entirety every month. Nearly 45 percent make only the minimum payments every month, and 11 percent make less-than-minimum payments. Before these students even graduate from college, they are racking up major amounts of debt.
Says Rosenthal, “Money is not character, but how we use money reflects our character. If we are just giving kids money and giving them things, it communicates a message of what is important in our family: ‘Giving time isn’t important, but money is important.’”
These miscommunicated values, she says, have consequences. Kids who get as much as they want when they want it have problems with instant gratification and with long-term planning. They also have problems with relationships on a personal level and at work.
“They know nothing about how to plan: to want some thing and make it a reality. … They grow up with a sense of entitlement. They have a high sense of self-esteem, but they are not team players and they don’t do well in relationships. The children of permissive parents grow up with an expectation that life owes them something,” says Rosenthal.
What is the solution? Start talking, says Rosenthal.
“Spend some time teaching your kids early about money. … Talk about your family’s philosophy about money. Show them where the money goes. Show them where you pay for gas, bills, Christmas presents, Uncle Sam. It can be a half-hour a month,” says Rosenthal.
Know, too, that other families are struggling with these same issues. “We generally assume that because a family lives in a big home, drives new, expensive cars, and has gadgets for themselves and their kids galore that they are rich. Sometimes, yes, but most of the time, no. They usually have large debt payments,” says Lewis.
Ultimately, the time we spend with our kids tells them more about how we feel than any toy, any designer outfit or any car ever could. We communicate love and respect through genuine interaction not purchasing power.
“You can never assume because you give your kids stuff that they know they are loved,” cautions Rosenthal, who suggests a better formula for happiness and financial responsibility: “Twice as much time, half as much money.”