When a child asks, “Dad, are we rich?” the typical American dad will reply, “I am, but you are not. I earned my money through hard work. When you grow up, you can also do the same.”
The child who hears this will be motivated to work hard, and he will develop expectations in life. He, too, will be motivated to attain the wealth that his father did through hard work. In this way, the American dad not only imparts material wealth to his child, but he also imparts spiritual wealth, which is a much more important resource for the child’s future.
On the other hand, when the Chinese dad is asked the same question, he will usually reply, “Our family is wealthy, and all our money will be yours one day.”
Receiving such a response, the child will think that his father is a rich man, and his father’s money is his own. He will likely be less motivated to work hard as he thinks he is already rich. In this case, the Chinese dad only gives his child material wealth.
Teaching your child financial responsibility and independence is one of the most useful lifeskills you can impart to them. Here are a few pointers on how to do so:
Don’t Hesitate to Discuss Money Matters With Your Child
A new joint study by North Carolina State University and the University of Texas reveals that, even from a young age, children pay close attention to the subject of money.
Children also frequently report that a family’s financial situation, such as the parents’ income, investments and debts, are often taboo topics in their conversations with parents.
Professor Lynsey Romo, lead author for the study, suggests that parents should try discuss such topics with their children, to ensure that their child does not develop misunderstandings about managing finances.
Prof. Romo said, “If parents aren’t talking with their kids about subjects like family finances or debt, the kids are drawing their own conclusions—which may not be accurate.”
Doing so also helps children to develop a healthy outlook on finances in life.
Don’t Make Your Child Feel Entitled, No Matter How Rich You Are
There is a Chinese belief that “No matter how poor you are, you should not impoverish your children”.
On the other hand, the general Western belief is that “No matter how rich you are, you should not make your child feel rich”.
Many wealthy people recognise that, when a child develops a sense of financial superiority over others, it ultimately does more harm than good to him.
These wealthy parents will tightly control the amount of pocket money that their children receive, and encourage their children to make money on their own.
In this way, the child will understand that money is not easy to come by. He will also learn that meaningful wealth can only be found through one’s own efforts—a learning process that may be more valuable than the wealth itself.
There is a popular Chinese article online titled, “The Best Way to Love is Not to Love—Reflecting on Our Education Philosophy”.
The article recounts the following story:
“I know a man in Hamburg, Germany who is rich in the truest sense. Since his father’s generation, his family has not needed to work, as the family’s assets generate sufficient income.
“When he was 18, his millionaire father gave him a small sum of money to travel around Europe. It was so small that he could only afford to spend today’s equivalent of 2.5 Euros (S$4) per day, which even then was considered a very meagre sum. Some days, he could only afford to eat burnt bread and drink tap water. He slept in hostels, stranger’s living rooms, stables and on the streets.
“When he returned 40 days later, his family held a big party for him, with flowers and an endless flow of champagne and gourmet food. But he couldn’t help feeling sour about the fact that the money for one glass of champagne here would have bought him a satisfying meal during his travels.
“He told his father what he thought, with a trace of accusation in his words. But his father replied, ‘Son, I am spending my own money. And you are spending my money.’
“The son then realised his father had just given him the most important lesson in his life—when a man reaches adulthood at 18, the money he receives from his parents are gifts. He should be thankful regardless of how much he receives, and he should cherish every cent.”
Rock star Sting has a net worth of 180 million pounds (S$370 million), but he announced in June that he is donating his entire estate to charity after his death, leaving none to his six adult children. According to him, “They have to work.”
Bill and Melinda Gates have donated more than US$28 billion to charity. Yet they have been extremely “stingy” with their children. Gates once publicly said that he would not leave much to his children as he doesn’t think “that amount of money would be good for them”.
Teach a Man to Fish
There is a well known idiom, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”
If a parent truly loves his children, he would teach them the skills to live independently, even if the learning process can be tough. If all that a parent gives to his children is money, his children are likely to simply spend it on enjoying themselves, and eventually exhaust all of it.
FInancial Education Teaches Children to be Responsible
An education on finance is crucial as not only does it teach children financial skills, it is also an education on character and responsibility.
Data shows that 54% of U.S. teenagers do not have pocket money and the older they get, the less likely they will receive pocket money.
The average household income of a British family is more than ten times that of an average Chinese family. Yet, in the UK, there are over half a million newspaper delivery boys, many of whom come from rich families. From their job, they learn to endure hardship and that money is earned through hard work.
Receiving tough training from a young age, these children grow up to be independent, calm and composed. They are able to live harmoniously with others and they have the courage and confidence to confront difficulties.
There is a Japanese saying: “Besides the sun and air from Mother Nature, everything else must be earned through hard work.” Many Japanese parents give their children a fixed allowance, and teach them to spend it wisely. Such lessons are crucial as not only does it teach children financial skills, it is also an education on character and responsibility.
French philosopher Jean-Jacques Rousseau once said, “Do you know the most likely way to make your children unhappy? By giving them everything they want.” Certainly food for thought!