There's a fear of screwing up our kids as FIRE parents (financially independent retired early parents). If kids grow up in a nice home, drive a nice car, and don't see their parents working, it becomes easier for kids to take money, life, and work for granted.
As a parent, the last thing you want to do is raise a spoiled and entitled brat who contributes nothing to society. Taking away a child's sense of purpose because he or she grew up on Easy Street is a terrible thing.
Unfortunately, I've observed a number of adult children end up aimless over the years because their parents were wealthy.
The Fear Of Screwing Up Our Kids When Parents Have Money
Every other weekday, I walk by my 27-year-old neighbor playing catch in the middle of the street with his 20-something-year-old friend. He's a nice guy with an intricate tattoo of a dragon on his right throwing arm. I saved his beat up Subaru Outback from getting a $120 street cleaning ticket one day, so he's always super friendly.
Although Jake is a nice guy, it doesn't seem like he has a job or any ambition beyond just having fun. When he's not playing catch in the middle of the day, he's off to Tahoe with his buddies for a week at a time.
When he's not snowboarding, he's traveling for a softball match. It's a great life. I just wonder whether his parents deprived him of his potential because he's still living with them.
The truth is, I'm afraid my son will turn out to be like Jake or my other 26-yo neighbor who lives at home with his parents and wakes up the street every morning with the gurgle of his new motorbike.
When I asked his mom what he's doing now that he's graduated from college, she shrugged and told me, “he's still trying to find himself.” Fair enough. At least he's got a sweet sports car and motorbike to take him wherever he wants to go.
But come on. My neighbors is a prime example of screwing up our kids by giving them too much.
A FIRE Parent's Warped Reality
As two stay at home parents who live unconventional lives, we feel our financial independence may end up screwing up our son's life. After all, being raised by middle class and lower middle class parents, and going the traditional route ultimately led us to FIRE in our 30s.
I now approach life not caring about following the rules anymore. Don't want to go to college? No problem. Just take classes so you can be an expert in something. Want to try your hand at online entrepreneurship? Sounds good! Your old man can give you some good pointers. Don't want to get married? Wonderful. Use the annual $10,000 in marriage penalty tax savings to go see the world.
For those of you who've built some multi-generational wealth, who have FIREd, or who work non-traditional jobs, let's talk about what our lifestyles might do to our kids.
Educational Attainment And Screwing Up Our Kids
As a tennis coach for a private high school in SF, I've begun to learn about the intricacies of the private school system. You're supposed to apply to a feeder pre-school before your child is born in order to get on the track to one day get him/her into the very high school I'm coaching at.
But before applying to my high school, you've first got to get your kid into one of the selective K-8 private schools after completing pre-school. The admissions process includes an evaluation of how your kid plays with others as well as an aptitude test. Talk about putting your kid through the gauntlet early on!
The thing with going to an elite private high school is that not every alumni gets into a prestigious university. In fact, only the top 10% of kids get into the most selective universities. Everybody else gets into a top ~50 school, which is great. But so do many kids who go to free public high schools.
Further, I do wonder what if a kid goes to Harvard and ends up a nobody? That's one way of screwing up our kids, putting unreasonably high expectations on them.
Public School Seems Just Fine
As a public high school graduate who attended a public university and got a front office job at Goldman Sachs in NYC, I 100% believe in the value of a public school education – so much so that I have ZERO stress about trying to get my son on the private school track. If he doesn't get in, he'll go to public school, hooray!
But because I hang out with so many friends who do send their kids to private school, they give me stress about whether or not I'm doing the right thing being so lackadaisical. I think, Will not sending my kid to private school, even though I can afford it, deprive him of an opportunity to reach his full potential? This stress is part of the reason why I'm considering leaving San Francisco.
While at Goldman Sachs, we routinely rejected kids from Harvard, Princeton, Yale, Stanford, Columbia, Cornell, UPenn, Brown, and other great schools for various reasons. One consistent reason was that the rejects were all one dimensional, uncharismatic geeks who didn't know how to communicate.
Higher Expectations Graduating From Private University
If you can't get a good job, what's the point of spending all that money, working so hard, and stressing all those years? The more prestigious your education, the higher the expectations.
I'd rather have my kid attend a lower tier school and surprise on the upside. Your mannerisms, communication skills, affability, work ethic, and connections are more important than where you went to college. You can work on all these things without ever attending a top ranked university.
Besides, in 18 years, how important will a traditional college degree really be if everything can be learned on the internet for free? There are speciality schools popping up everywhere now that teach kids hard skills. Over time college may eventually become a relic.
Career Choices And Screwing Up Your Kids
I firmly do not care if my son becomes a lawyer, banker, venture capitalist, private equity investor, strategy consultant or some other traditionally high paying occupation. I'll be proud of him, whatever he does. I just want him to be happy and find someone who cares about him as much as I care for him and my wife.
As someone who worked in finance for 13 years and has written about money for more than eight years, I clearly see how money and prestige does not automatically lead to happiness. I've written about this topic over and over again with examples such as:
Scraping By On $500,000 A Year: Why It's So Hard To Escape The Rat Race
Do You Want To Be Rich Or Do You Want To Be Free
The Unhealthy Desire For Prestige Is Ruining Your Life
Occupations That Help Others
The only professions I feel are incredibly honorable are those that help other people. Being a doctor or a teacher are two occupations that come to mind. Working at a non-profit that helps foster children is another.
I can't believe how much education doctors have to go through to be who they are. To be able to heal and provide solace are wonderful skills that cannot be over-appreciated.
Given there's nothing more precious than our children, I believe teachers aren't given enough credit for what they do. A good teacher can make all the difference in the world.
Mom and dad have already sacrificed themselves for money. Thus, after graduation we'd like to have our son focus on service to others.
It's sad to see that almost 60% of Harvard graduates and other Ivy League graduates pursue Finance, Consulting, or Tech upon graduation. See the chart below for 2022 graduating class.
What happened to saving the world? Instead, there is this pull to go into industries to make as much as possible and give up one's childhood dreams. Related: The Median Income Earned By Ivy League Graduates
Give Our Kids A Sense Of Achievement
There's nothing better than working hard and then achieving your goals. We want to instill in our son a work ethic that allows him to appreciate the correlation between effort and reward. To give him everything would be an absolute travesty, because we never fully appreciate what we don't earn.
I fear we won't push our son hard enough to achieve his maximum potential. Instead of spending at least three hours a night on homework like his mother and I did in high school, let's just have fun since he's going to forget everything anyway!
If we were struggling, surely we'd like for him to go to a great school and get a high-paying job so he can not only take care of himself and his future family but also provide us some financial relief as well. But we don't have such anxiety.
We're going to try our best to raise a grounded kid who appreciates the value of a dollar. We’ve put our kids to work with rental property maintenance activities so far. However, it’s still early and we need to be consistent with the work.
I know it's going to be a challenge because our son and daughter will wonder why their parents are the only parents who never have to go to work. He’ll wonder why his old man is at every soccer match, every orchestra recital, every play, and every debate. He'll see that all I do is type on a keyboard for several hours a day and that's it!
This lack of a full-time job is one of the main reasons why I accepted another two book deal with Penguin Random House after I published my bestseller, Buy Thus Not That. Each book takes 2 1/2 to 3 years to produce, which means it gives me 5 to 6 years of work that I can demonstrate to my children. To produce something tangible, they can hold and read is the icing on the cake.
Inspired By My Mother's Hardship
I remember clearly as a 23-year-old wanting to make as much money as possible so my mother could retire earlier. She was often stressed at work and even consulted me on whether she should retire before the age of 60.
I told her to not waste one more second at a job she disliked. Her pain motivated me to aggressively save in order to let her be free sooner. When she retired before 60, it was a happy moment.
But for us, he will see no work pain. He won’t get to experience his mother coming home distraught after being passed over for a promotion for a less deserving male counterpart.
He won’t go without his father for a week at a time due to constant business trips to Asia. Instead, he will simply see the joy of not having to work for anybody. Our hope is that he finds some motivation in entrepreneurship. Screwing up our kids is definitely always on our minds.
Is It Time To Stealth Wealth Our Kids?
Deep down I find solace knowing that no matter what, our children will be fine because we'll always be there for them. And if we are not there for them, my wife and I both got matching term life insurance policies with Policygenius during the pandemic.
But I wonder whether it's a good idea to Stealth Wealth our son and daughter before they understand what wealth means. I'm thinking it's a good idea, but sacrifices to my and my wife's lifestyle would be needed.
One of my friends lives in a $18 million mansion and flies private with his kids. How the heck are his kids going to be happy with anything less than the best once they get jobs? Will they be willing to live in a dumpy room in an overpriced SF apartment because they only make $50,000 a year? Hard to imagine.
We already live in a middle class neighborhood in a very humble home that's less than 2,000 sqft. All we'd really have to do is get rid of the SUV before he's seven five years old and drive a Honda Accord instead. Mom doesn't wear jewelry, and I just wear jeans and sports clothes.
We want our kids to have it better than us. And I'm sure our kids want to see if they can one up their parents. But if you retired in your 30s and live a life of leisure, that's going to be damn hard to beat.
Other Solutions To Help Our Kids Build Character
- Make them earn by putting them to work around the house
- Show them, don't just tell them what to do
- Take them on trips to developing countries to see how good they have it
- Encourage them to learn another language
- Donate to your kid's school to cultivate a practice of giving
- Explain why things are the way they are
- Continuously work on something of interest. It doesn't have to be work to make money. It could be practicing your guitar, singing, a sport, etc.
- Make them work manual labor, like landscaping a rental property
- Hang out with wealthier kids or kids whose parents give them more to make our kids feel poorer. This way, they may work harder and accept that life isn’t fair.
Going Back To Work May Be The Best Solution For FIRE Parents
Upon introspection, I've come to realize that intentionally depleting my passive income in the latter half of 2023 served as a powerful motivator for reentering the workforce. I didn't want to go back to work, but I forced myself to in order to demonstrate work ethic to my kids.
I hope that witnessing me getting on calls and producing something will inspire them to approach their studies with equal diligence and not take opportunities for granted.
Although I'm technically no longer financially independence because my passive income doesn't cover our living expenses, I feel happier for earning less passive income. The reason why is because I've got renewed purpose to work. And every man needs to feel useful.
Maybe We Don't Need To Fear Screwing Up Our Kids Too Much
Any mess-ups are teachable moments. So long as we aren't inflicting trauma onto our children through abuse or neglect, they should hopefully turn out OK.
Now that I've been a father of two kids for almost eights years, perhaps the fear of spoiling our kids is overblown. The more we spend time demonstrating our work ethic and teaching them the importance of hard work and saving, the less likely they will be spoiled.
If we decide to give our children financial assistance as adults, I don't think it will demotivate them. They will have gone through enough hardship to really appreciate any money we give them in their 20s and 30s.
By the time our adult kids turn 40, they will most certainly be set in their ways.
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Related posts about financial independence and children:
No Wonder Why Millennials Don't Give A Damn About Money
A Massive Generational Wealth Transfer Is Why Everything Will Be OK
How To Get Your Parents To Pay For Everything Even After You Become An Adult
Confessions Of A Spoiled Rich Kid
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The Fear Of Screwing Up Our Kids As FIRE Parents is a Financial Samurai original post. All Rights Reserved.
I’m really trying to teach my kids about good values that will hopefully help them throughout their entire life. Showing compassion, helping others, working hard, etc. I’m starting simple since my kids are young. For example, this year I’m going to celebrate Boxing Day with my 3 yo and have him gather old toys and books that he doesn’t play with anymore so that we can donate them to kids in need.
its not hard i mean just have to set limits as parents. just dont buy your kids whatever they want. teach them the value of a dollar. when they turn 18 buy them an old used toyota to drive, pay for their basic essentials and tell them if want to buy nice clothes, shoes go on dates with their girlfriend to get a part time job to learn the value of a dollar.
tell them when they get a full time career job they can buy any car they please because they will have the money to do so. its not hard you just have to be strict and set limits
I’m going to make them do chores, lots and lots of chores. And, I plan to do the chores with them to show that nobody is beyond hard work and contributing around the house. Whoo hoo!
My wife and I struggle with the very same questions. Our kids are 8 and 10. We for sure are taking the stealth wealth approach. Even though we are there for their activities after school, we make it very clear we are working during the day (and night sometimes), even though it’s moslty from home.
Sam, you might show them you’re non-traditional approach has worked out great but it’s hard to convey the hard work (hustle) part during your first 10 or 15 years if they don’t see it first hand. Now that you’ve made it and are taking it easy (relative to before), how do you make sure that your kids understand it takes hard work to achieve anything meaningful?
My kids have some sense that I still work hard, but when I tell them about my former 70 hour work weeks as a consultant, it might as well be a fairytale. They usually see both parents when they return from school and that’s normal for them. There are many stay at home moms and dads at their school. They don’t understand a world where both parents work and return home 7 pm or later, kids stuck I’m after school programs having to figure out homework on their own.
I told them when I was a kid nobody helped me on my homework and I got it mostly right. For them, they regularly get easy questions wrong or forget to turn in their homework. We are always around to double check everything. Our affluence has become their crutch. They definitely don’t think we’re rich (mostly because I’m overtly frugal) but they clearly lack the sense of self-drive my wife and I had at their ages.
I never thought about the ramifications on raising children of the FIRE lifestyle. Wanting to raise empathetic people is already quite a feat. Do you have a language in mind for him to learn? I’m excited that my newest nephew will be raised bilingual. Now that I’m his godmother, I need to become fluent in his other language. If he ever ends up needing to live with me, I want him to have access to both languages in his brain.
I don’t think your son will be screwed up by the fact that you’re not doing “traditional work”. While you’re not subjecting him to the painful motivators that get a lot of people going, you’re also not spoiling him – you’re not teaching him that his actions don’t matter – you’re not showering him with unearned gifts and toys and shiny objects.
One of the things we talk about regularly with our kids is the active choices we’re making and why we make them. It’s one thing to see a person achieve their dreams – it’s another to hear their thought process as they get there. As we work toward self-employment (currently) and eventually financial independence, we’re focusing on the core messages:
– Money doesn’t buy happiness but it does buy food. You need enough but there’s a point of diminishing returns
– Good things come from hard work. If you never put in hard work, you can’t expect much.
– True joy in life comes from sharing love with others; in our case this comes via our religious faith, but I think anyone can share the sentiment. The happiest people tend to be those that live a life of service.
– Life is short – you have to strike a balance between building for the future and living for today.
My hope is that putting all of our decisions in this context and communicating openly and honestly about what we learn (and our mistakes along the way) will set them up with the right framework to define their own success, their own freedom, and claim it for themselves.
I’m a pharmaceutical research scientist and I’d like to think what I do helps people. Developing medicines that affect many. While I don’t have an MD, I do have a PhD from a medical school and also went through a lot of schooling. With deadlines and detail, it’s not an easy job (despite what the press says about high prices, we certainly get decent salaries, but most of the money goes to the executives and their golden parachutes when they run the stock to the ground). I had a daughter about the same time you had your son, and an older daughter, and I think they’ll be fine.
I think whether we are FIRE or not we all fear we are screwing up our kids! lol. We opted for public school and to be involved with the school, despite both of us working. We both have flexibility and are able to help in our own way. I am PTO President, after spending years volunteering in the classroom and my husband volunteers in the classroom and also helps out with fundraising. Both kids (11 and 8) do very well in school. I think the key is to be involved, not only in the school system, but after school as well. I know you had a post about how important the first 5 years of life are, but my personal opinion is that it is even MORE important for someone to be home after school.
As for the Stealth Wealth, our oldest is starting to figure things out a bit. We are always honest with them, though they do not know the details. They know that we work hard, save hard, and we spend money on things we feel are important. They also know that we are not “rich”. At our age and in our area, we would be considered “rich”, but we do not consider ourselves to be there yet. One day we might have to be more honest with them.
What is the real measure? I think the real measure is to first get to about 30 with no debt and some money in the bank and maybe some BRK.B in a Roth. By 30 you need to understand where you want to be when you are 60, and then go make that happen. That is the real freedom of living in America.
I had a blast in Guangzhou! Also been in a few other cities in China, and Hong Kong. Very interesting and kind people. They liked to practice their English on me and I liked to find out about them. Completely different way of being compared to USA. Not better not worse just different.
Our tact was to create the environment, and allow our children to seek their own level. We home schooled using a Great Books Curriculum with supplementals. Both kids did dance and one gymnastics as well. Both took piano, one went on to major in music and is touring Italy this Christmas with her Choral group doing 12 performances around the country. The other kid is entrepreneurial and sells figurines and jewelry she designs. Both are into photography and have photography businesses though their take on photography is completely different. One kid taught herself website design. One kid did her last year in HS because she wanted the experience of walking to get her diploma. She told me HS is no big deal and she graduated with a 105 average. The other kid fought me about home school till she got to college. Then she was SO GLAD she skipped all the HS nonsense, plus she went in as a Sophomore
Both kids have been to Europe, different parts and have 2-3 languages under their belts. What’s my point? I created the environment, planted the seeds, watered the soil and let it happen. It didn’t cost all that much, had to run them to dance class, had to buy a Piano a Violin and a Guitar, (I balked when #2 wanted a drum kit, I’m liberating not stupid). Had to buy some airplane tix, take some trips. Bought them some digital software and computers. I set up boundaries and let them push up against them and when ready I let them push through and set up some new boundaries. Oh in case you’re wondering yes they are socialized.
I think it’s this kind of approach, environment, boundaries and breaking through that breeds success. Neither one of my kids has the first clue of my net worth. Worry about making hay with them today and tomorrow will handle itself. They are both into early adulting now, and life is a gas.
Best
What were your reasons for homeschooling? And was it both parents who is homeschooled or the husband or the wife? Do you think it’s possible to homeschool while traveling internationally? Thanks
I was not satisfied with public school curriculum.
Daughter #1 was hellbound to learn to read and was reading by age 4. She was very verbal. Both my kids are adopted orphans from China. We taught them both sign language when they were pre-verbal and #1 had a 100 word vocabulary including making up her own signs before age 2. Could hold a complete conversation with my wife. #2 was less interested in language but still engaged and able to communicate before she could speak.
When it came time for “pre-school/K” they were well beyond anything the school had to offer. My wife was a pediatric OT and had seen the meat grinder they were headed for, and rather than retard them we just went with the flow, i.e created the environment. Both of us taught but we also were engaged with a fairly high horsepower school curriculum online. Like I said it was great books so my kids were reading the Odyssey and Beowulf in the 6th grade and had read parts of the Koran by 10th grade, it was socratic group discussion based around reading.
They had online science, took oceanography, 2 years of biology, physics and chemistry as well as math up to calculus. Neither of them are inclined to advanced math. I trained as an engineer biophysicist and chemist prior to medicine so I was the science dad. We took languages online. Both kids had classical Latin some Greek, one took French the other Spanish and one took immersion Italian when she did a summer abroad. We were part of a local homeschool group, so plenty of friends and they even met some of the kids from around the country that were in their online classes when we traveled or those families traveled near here (we live 50 miles from Disney so everybody eventually comes here), and some of those friendships endure till today.
So if you have an internet connection abroad it is certainly doable but you have to be a little structured. You can do almost anything with good internet. When we traveled to China to pick up #2 in 1999, I was daytrading from the White Swan Hotel in Guangzhou. It was actually night trading since they are 12 hours ahead. Made enough money to pay for the whole adoption.
Fascinating stuff. My father worked out of Guangzhou in the early 2000s.
So I guess the big question is, with all their language ability and schooling, what are they doing now with their lives? What is the real measure of whether we raised our children properly or not?
Daughter #1 is in her last year of college. She is looking at becoming a music director at a church, or possibly grad school, or possibly music therapy at a Veterans hosp with PTSD or children’s hospital. Her major is piano and organ but also digs choir. I can easily see her eventually as music faculty at a smaller college in the midwest somewhere.
Daughter #2 is in her 1st year. She is interested in criminal justice, possibly law or business. She is very entrepreneurial. She had her driver’s license 5 minutes after she was eligible and a job as a cashier at a grocery store 10 minutes after that. She wanted to experience the power of making and owning her own money. Made 5 grand part time her first year.
Homeschooling made them to be able to massacre their course work and they value knowledge. Both kids want to be married with children.
“Instead of spending at least three hours a night on homework like his mother and I did in high school, let’s just have fun since he’s going to forget everything anyway!”
Too true, Sam. Too much of what students learn in high school doesn’t build on previous knowledge. Even if it did, what good would it do, really? “The Sinking of the USS Maine started the Spanish American War.” Whoop-de-doo.
You already know this, but skills are the only thing that matters. Getting your kid involved with coding and second-language learning will put him in a position ahead of 90% of other students. Regardless, there’s no doubt in my mind that he’ll be fine no matter what.
He does have you guys, after all. Look at the hundreds of thousands of people who have benefited from your knowledge. That won’t be lost on your son, I’m sure.
All the discussion above about having a ‘notable’ auto is interesting to me. It works in reverse, too.
We’re in an affluent community and have always tried to instill in our 4 kids the notion that many, many people do not have such an affluent life. It’s somewhat hard to get that across around here because it seems the average 16 year old gets on her birthday a brand new BMW/Lexus/LandRover/Mercedes SUV to drive to school, etc.
Besides just general dinner table discussions, it also helps that we both have relatives we visit a couple of times a year who live in more economically depressed areas where the houses go unpainted or obvious repair needs go unaccomplished for want of cash, and we explain how it’s like this for a lot more people on average vs. how it is for us.
Anyway, my 3 oldest kids seem to have internalized this pretty well and don’t exhibit much in the way of entitlement syndrome.
On the other hand… my 13 year old son and I did a fair bit of driving around this weekend and he was acting more argumentative than usual, being a contrarian on every discussion topic. I finally just asked him what was on his mind.
Turns out he’s angry with me for continuing to drive my beaten-up, 150K miles, 10 year old Honda. He feels embarrassed to be seen in it, particularly in The Land Of The Luxury SUV In Which We Live. Wants me to get a new, notable car or SUV.
Seems we’ve got some work to do on this one yet. :-)
I felt embarrassed too when I was 11-13. It was 1988-190, and my dad was driving us around in a 1976 Datsun that didn’t have any paint! It also was missing one or two hubcaps. It was so embarrassing.
He didn’t have to drive a luxury car, just a normal car, like a Honda Accord with paint that was within 5 years old. But nope.
Haha, good story.
When you tell it to your son when he’s 13 or so, his response will be, “Dad, what is this ‘hubcap’ thing you’re talking about?”
Come to think of it, I’m not sure my son would recognize the term either. Except as decor for ceilings of beach-area restaurants.
We have thought about this for a long time. We agree with you. Some level of stealth wealth and item depravation for the kids is good. You may be able to afford a lot, but that is not necessarily the right thing for your kids. you may want to give them everything to make them continuously happy, but that does not build a real sense of the world or resilience.
My parents were also Stealth Wealth, and growing up I watched them work their fingers to the bone (my dad as a partner in a small engineering biz and my mother as a Vice Principal). They continually emphasized the importance of hard work, persistence, and education, as both put themselves through public schools to attain better lives. I remember my mother working all day, coming home to make a home-cooked family dinner, and then sitting at the kitchen table working on her Master’s Degree while we kids did the dishes (in her 40’s). They both drove old Astro vans, although my dad had a small plane.
We would take vacations that must have been expensive but were off the beaten track and more about the experience (camping in Baja, summer family camps with family friends, going fishing or skiing. Never fancy.). As a kid I sometimes resented that they worked so much (even weekends were full of chores and and house improvement projects), but as an adult I appreciate those early lessons SO MUCH, and look back with amazement on what they taught me. I am a 35-yo successful entrepreneur with multiple multi-million $ businesses.
Have you read or listened to “Bringing Up Bebé”? Hilarious and very insightful account comparing French parenting methods to American. My husband and I are pretty much using it as a playbook :)
You have one lucky son. With as much thinking and planning that you are doing already, he’s going to turn out just fine, much better than fine I’m sure. You’ll teach him good values and show him that work doesn’t have to be like the old traditional way. The “workplace” and education have already changed so much in the last 10, 20 years. So it’s bound to be even less traditional and more flexible in a lot of ways once it’s time for your son to start working.
Having your own business is huge imo and can really teach him a lot. I never thought I could do something entrepreneurial because my parents never talked to me about that type of work or let me believe it was possible. I think that’s partly why I’ve been so scared to take risks in life and that it takes me a long time to build up the courage to make changes.
You have so much you can teach and show your son first hand about what running a business is really like and that’s truly special. I think that’s really fortunate too because I think there will be more and more small business owners and independent workers as time goes on. There’s already a shift happening in that direction.
My daughter told me one day, “when I was growing up you and mom were fake poor”. It worked she has a MA in music education and is frugal.
What is she doing now? Do you think if she realized you guys were actually poor or didn’t realize you were fake poor she may have tried to go into business, engineering or the sciences to potentially make more?
Lots of great comments here.
As a parent with a four year old daughter I’d recommend the following starting habits:
1. Start to guide your child to make choices. One item vs another but not both. And the notion of a trade off- if the child wants something new then she has to give something old up. This is good starting from age 2 and up.
2. Try to practice delaying gratification. For items like watching TV, or some fleeting reward, start to give triggers for holding on, delaying a bit, shifting attention and then coming back to what is wanted before actually giving it. This can start from age 1 and the time before the rewards can build up from there.
3. When the child is older practice having the child do certain tasks and simple jobs to ‘earn’ money and then explain the concepts of saving it for later (delayed gratification) and using some now for spending. This should be for fun items vs pure necessities.
4. Make it clear to the child when they are older that you will pay for their education but not provide them adult economic support. They need to learn the value of earning for themselves but you can give them the tools of hyper saving and some of the concepts of investing and building continual positive cash flow. This will depend on how receptive they are to the concept. Making it like a game always helps. The best games are hard but have unpredictable and intermittent rewards that create interest to continue playing.
5. Read to your child often and make up stories, games, and mash ups between different stories and ideas. The concept here is to stimulate the child’s curiousness and desire self learn and explore.
6. Make sure that at least one parent is the key disciplinarian who demonstrates consistency in their rules and is ruthless in doing what they say they do. This would be my wife, and thank God for her abilities in this department. Normally a child meltdown ensues but that is what is needed to learn the important lessons on limits and boundaries.
-Mike
Good tips Mike! I think I’ll follow them all. Life is about making choices. Hopefully better ones out number worse ones.
Sam if you want to keep your kid grounded I would look to his extra curricular activities as he grows up. Many people live exclusively in their own bubble and only see their neighborhood and private school connections.
If the child grows up around good people, people who can be mentors but people who are not necessarily wealthy and well connected, he will learn that there are good people in every culture, every neighborhood and every socio economic spectrum. If he likes tennis, expose him to people who play tennis of upper class backgrounds, and not so prestigious. I am willing to bet there are skilled players and coaches to learn from in other neighborhoods too. If he likes music, expose him to musicians who aren’t Juilliard educated but incredible artists still.
A lot of our issues in the country today are because people assume x group of people are all the same and can’t imagine walking in someone else’s shoes. Exposing your child to different cultures AND different social economic groups will lead him to be better balanced, more compassionate and hopefully understand that some people have to work very hard just to get by, and realize how lucky he is.
Easier said than done sure, but I firmly believe this is one way to prevent a spoiled and unmotivated child.
Lying to your kids about your wealth or anything else is evil and will ultimately destroy your relationship so please forget about the stealth wealth thing. You can live poor but you must be honest about your wealth or however you want to frame your relatively decent net worth. And there is nothing wrong with public schools. They consistently don’t produce one dimensional geeks because the students are exposed to the real world in all its beauty and ugliness. You should demand their best at school work and let them make a guided choice about college or a trade or an entrepreneurial career but once they are past that start you shouldn’t let them live at home or provide more than token support unless you want to create the kind of dysfunctional losers you opened your blog describing. I’m older and have three grown self sufficient kids who grew up exactly that way, living poor though they knew the numbers said they were richer than any of their friends. They’re cool with that now.
We spent our entire lives striving to escape the conventional crab bucket and retire early (the younger the better correct?), then we worry that our children won’t be subjected to enough of the same indoctrination? Home school your children (we did), you will never regret it. Who wants to be retired and then turn around and be yoked to a school schedule? NO ONE will ever care about them more than you. You are all incredibly bright people with more success and experience than you can impart to them in a single childhood. This is uncharted territory. You are the first of your kind. Don’t spoil them, but for goodness sake, what if you raise them to NEVER need to retire early because they function under a completely revolutionary paradigm?
I think by always communicating with your kids and teaching them to basics of money(earning, exchange goods for money, saving) they will know how money is earned, spend, save, and built. Some especially with parents that have a lot of wealth see it as lots of money of be spend and will think that consuming is the way to go. And with you already thinking of how to raise your kid is a great start.
I’m on the same boat with a 18 mo and already thinking the best ways to raise him. Communicating about money is something I’m planning to with him in a few years.
This is true. But keep in mind every kids is different. We have an 11 year old girl and 8 year old boy and have done the same thing in teaching them both about money. The older one LOVES to save and the youngest one LOVES to spend everything he has. I am looking for any advice to teach the younger one about money. At his age, my daughter already owned two shares of stock, which she earned through lemonade stands.
I was like that when I was younger, save up for something and spent it all, never thinking long term, because I had to spend it while I had it. I think I only grew out of it when I matured enough and understood how the world works; a jarring dose of reality and financial responsibility if you will.
One more thing occurred to me. I became almost fanatical about money when I realized I wanted to fulfill my ambitions and life goals (my 9 to 5 was fulfilling for a long time but my work environment changed) and time is running out.
Hope that helps!
Children learn by watching their parents, so I get the concern that if they see you being home all day and only having to type on your computer for a few hours, then they might lose motivation. My recommendation would be to demonstrate how you can be productive to society without a 9-5 grind. Whether that is pursuing a passion that benefits someone other than yourself (I think coaching tennis qualifies), volunteering to help those less fortunate (and getting the child involved when they are age-appropriate), or any other pursuit you can think of (like when they are old enough show them how you help people through your website), I think if you consistently do these things yourself will more than likely rub off on them in the long-term (even if they go through a rebellious period during adolescence).
Let them have stuff when they’re young and then at an EARLY age, start tapering off. It’s also hard when friends kids have the latest gadgets and your kid wants it too. In order to build character, I’d say volunteer with them, eat simple foods, wear simple clothes and go on simple yet fun places. And public schools all the way; they have a diverse set of students and attitudes, therefore, kids learn to communicate and straight-up deal with others in a broader setting.
I come from multigenerational wealth. I know when my parents pass I will be getting seven figures in their wills. However my parents never spent money like they had a ton in the bank. They would complain about $2 in late fees, and 100 other things that showed us the way. The biggest thing is they did not just give us stuff, we had to earn it. You want to drive a car at 16? Earn it with your grades (good driver discount), or you pay the difference. You pay for gas from your job. You get in an accident, you pay the difference in cost increase. You pay for college tuition and room and board for a local state school and it is their skin (ie. money) and decision to go elsewhere. Basically you make the kids understand the value of money, and make them responsible for their actions. You are not a bad parent by “limiting” them to a state school. You are not a bad parent for not getting them into private elementary schools. Your job as a parent is to help them succeed, ensure to help them learn, get a passion for learning, and remove some major road blocks for them to explore life. Beyond that, you are not helping them and are actively hurting them.
I think FIRE needs to be separated into FI and RE. I grew up in a middle class family w/ working parents, so even I got lucky and have achieved FI (~$8M networth, passive income $200K/yr), i still go to work and as an individual contributor, not even a manager. We’re waiting for our kid to go to college before taking up travel and the RE part, but hopefully by example we show him it’s OK to keep working for a living as long as you like what you do.
Being involved and interested in your child’s education is more important than their primary school education, IMO. Helping to tutor and following up on if/how they did their homework/studies will matter much more.
I’m a public school graduate, who went to a private college in the Northeast along with a LOT of prep school types. I found a lot of them (not all) to be insulated, lazy and entitled. Think of the guy that uses an insecure girl to write his papers. When you’re given everything, you lose your edge.
One the flip side, the college recruiting department of a top school is extremely valuable. As are the connections to people you will make in school, along with their networks. As long as the system is set up to “protect your own”, established/strong networks greatly increase peoples’ chance of success.
I also worked on wall street and know that I always preferred the scrappy, hard-worker who appreciates their spot to the entitled guy from a brand name school. That being said, they had to be smart too.