More Than Money
Issue #9
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Money and Children

Table of Contents

“Twelve Ways to Keep Trust Funds from Messing up your Kids”

"Trust fund brats." "Lazy, self-centered rich kids." These stereotypes strike fear in wealthy parents' hearts. Many parents who intend to give their young adults a substantial financial boost-or whose kids already have trusts established by grandparents--are rightly concerned that these well-intentioned gifts could undermine their childrens' motivation, self-confidence, or relationships.

Below we summarize the concerns most frequently expressed and the ways parents we interviewed have addressed them. This is not an exhaustive list. Of course, what is appropriate depends on the individual child and the particular stage of his or her life. The suggestions are for parents of reasonably "well-adjusted" children receiving significant amounts (in trust or outright) as young adults.

Concern: Kids will lose motivation to work.

Suggestions for parents:

  • Model a healthy attitude towards work, and help school-age and teenage children try out a variety of money-making and volunteer work experiences.
  • Accept that young adults may have long periods of work exploration, given the expanded options that money brings. Give plenty of encouragement and guidance (not pressure) to young people trying to find their way.
  • Distinguish between the value of meaningful engagement (work) and the value of earning money (knowing one can support oneself), and help young adults do the same.

Concern: Kids will handle the money badly.

Suggestions for parents:

  • Handle your own money well--spending, saving, and giving.
  • Teach children financial competence, starting young, as part of regular family life. As age-appropriate, let children know ahead what money they can expect, when, and why.
  • Give teens and young adults gradually increasing amounts to manage, so that by the time trust funds come they have practiced with sizable sums. Let them learn from their own choices and mistakes.

Concern: Kids will lose self-reliance.

Suggestions for parents:

  • Let teenagers stand on their own merits and make their own mistakes, and don't use money to bail them out or open doors for them.
  • Encourage young adults to take risks and sustain their efforts in the face of challenges--not just move on when situations get tough because their money provides that freedom.
  • Help young people find respectful mentors who can help them use money well--not as an escape, but as a tool towards something meaningful.

Concern: Money will separate kids from others (especially non-wealthy people) and hurt their relationships.

Suggestions for parents:

  • Have close friends who are not wealthy; raise children where they make friends with a mix of people; encourage contact (e.g. through volunteering) across class lines.
  • Communicate with young adults about money issues such as resentment, envy, trust, being open about money or not, making loans and gifts, power differences, and dependence. Acknowledge that even a small trust fund makes their financial life quite different from peers who have no such cushion.
  • Teach children the ways that money and class can create differences between people (e.g. people have different expectations of what their lives will be like) but that having wealth does not make people better or worse than others. Show them ways they can act out of concern for injustice, rather than guilt for their advantages.

There's no guarantee these suggestions will prevent potential difficulties. However, if parents implement at least some of these ideas, we believe there's a much better chance their children will experience their financial gifts as a boon, not a burden, and will develop as more responsible and financially-mature adults. .

--Anne Slepian and Christopher Mogil, MtM editors

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