Affluent parents -how do you handle money and your kids?

[Anonymous]

I have a good friend that is a self-made multimillionaire. He has one child who is now 17. The child got a job at a car wash when he was 16 and saved up to pay for 25% of his car (which was 5 years old). He has continued to work to pay for gas and outings with friends (dinner, movies, sports tickets). He is expected to work part time in college to continue paying for his fun stuff. His dad taught him how to save and has helped him learn about investing.

[Anonymous]

I am struggling with this too. We don't indulge by any means, but live very comfortably. DS is in high school and has no respect for money. Always leaving it around, not knowing how much he has, just assigns no value to cash. My DD, on the other hand, knows exactly how much she has and knows exactly where it is. So for us, it doesn't seem to make a difference what we do!! The kids are going to be however they are. And DD is the younger one...she grew up with during a period of very strong finances for our family. I just scratch my head on this one!

[Anonymous]

Our child does not have a clue that we have a lot money. Our house is small/average and cars are nothing that stands out in this area. We take nice vacations. I don't think anyone knows how well off we are, nor should they. If you are not flashy, your kids really have no clue. It's nice if your child has a trust fund so they can take a job they they enjoy, rather than based on what it pays. That is something I'm happy I can do. Just try to raise nice kids -- too many assholes out there. My kid may be wealthy, but he does not need to be an asshole! And right now, he has no clue that we are wealthy or that he will be someday.

[Anonymous]

We taught our kid that a lot of luck combined with a lot of hard work and being open to opportunity helped his parents become wealthy.

That wealth and money can be spurious so to value people and experiences over things.

BUT. We still buy things.

We are not trying to pretend we are middle class. We have the luxuries of retirement, savings, discretionary income. My kid can see that. So no amount of couponing and sales racks will hide that.

We work hard, contribute to the economy, and give back. A lot. We donate tons of money AND time to charity and volunteer work.

We are generous with our friends and family. Stingy is not pretty.

Like another PP pointed out, we reason financial decisions out loud and in his presence.

We raised a nice kid who KNOWS he
is incredibly privileged and as a result, is generous and thoughtful and respectful and GRATEFUL.

There is priceless value in being a good human being.But pretending you are not wealthy is not being a good human being.

It's putting on a nice sweater.

[Anonymous]

Anonymous wrote:We taught our kid that a lot of luck combined with a lot of hard work and being open to opportunity helped his parents become wealthy.

That wealth and money can be spurious so to value people and experiences over things.

BUT. We still buy things.

We are not trying to pretend we are middle class. We have the luxuries of retirement, savings, discretionary income. My kid can see that. So no amount of couponing and sales racks will hide that.

We work hard, contribute to the economy, and give back. A lot. We donate tons of money AND time to charity and volunteer work.

We are generous with our friends and family. Stingy is not pretty.

Like another PP pointed out, we reason financial decisions out loud and in his presence.

We raised a nice kid who KNOWS he
is incredibly privileged and as a result, is generous and thoughtful and respectful and GRATEFUL.

There is priceless value in being a good human being.But pretending you are not wealthy is not being a good human being.

It's putting on a nice sweater.

Counting other people's pennies is the least pretty - so what do you do about people who expect you to take them out (every time you go out with them)? And what if they think they deserve nice things, but you don't (in regards to who has what)? They get bitter about what you have, but expect you to be happy for them - how do you react?

Surely you run into this, especially if you have more money than your friends. I can't see paying for everyone each time you go out. We don't go out much, but really.

[Anonymous]

DH is from a wealthy family. I grew up on the lower middle class side. We never went hungry but did have our utilities get cut off sometimes.

His parents gave an allowance starting at a young age and everything not school related had to be purchased with that money. Granted, it was a generous allowance.

I grew up only getting gifts on Xmas, my bday, and Easter. I didn't get an allowance and didn't get to do many activities when I was younger before I was able to get a job.

Our kids get a weekly allowance that they use for the random wants that come up and DH and I cover the needs in life. We do seasonal wardrobe shopping where I'll pay and then anything extra they want after that trip, they'll buy with their money. Exceptions of course for school occasion clothes and random growth spurts.

We give each kid a concert pass each year where we'll pay for the tickets as long as one patent can also attend. If they want to go solo then they have to pay.

Sporting events and theatre are paid for by us because most of the time we are going as a family.

They get a new phone every 2 years when their contract is up. We don't just buy the latest and greatest because we can. We pay for their phones and have full access to them.

We gave the 16 yo a used car. I think it's crazy to buy a new driver a new car.

They are only allowed jobs during the summer. Through the school year all they can do to earn extra money is extra chores for us, babysitting, or helping our elderly neighbors.

[Anonymous]

I think all of the people posting that they act like they have less money than they have or hope their kids don't realize that they are rich don't make any sense.

I grew up very comfortably UMC (7 figure HHI), and DH and I are now UMC as well though probably earn slightly less than my parents did at our age ($600K HHI). My parents, both MDs, were very conscious of the value of a dollar but did not attempt to hide from us that they were well off. We were not allowed to just buy whatever we wanted (nor did they), but the reasoning they gave was never, "We can't afford it."

When we were young children, it was just clear to us that there were limits on how much stuff we could have/buy. It never would have occurred to me to wonder why I couldn't have a new toy every time we went to the store or whatever, it was just what we did. My parents also didn't just get new things all the time for no reason...and I also never felt deprived. When we were older, they were more explicit in saying that things weren't worth the price etc. It was also apparent to me by then that my parents were wealthier than some of their friends (they had 2 incomes and most of their friends had 1), but we were actually less indulged/spoiled than many of their friends. It's funny because my mom did always spend on high quality necessities, like expensive clothes always bought on sale. But we were not just given silly things we didn't need willy-nilly.

There are many oddities around how my parents handled money, but I think the idea of being upfront that they were choosing not to spend money that they had was valuable. When I was a grad student living on a $18K/yr stipend in an expensive city, I didn't find it difficult to manage my money and live on beans-and-rice without going into debt. By contrast, a couple of friends who grew up with parents who were forever using expense as an excuse not to do things (even when it was clear they could afford it), ended up in debt very quickly after graduating college.

If you are affluent, there is a decent chance your kids will end up that way too. The best gift you can give them is that whether you are able to afford something should not be the motivating factor of how you make spending decisions.

[Anonymous]

Counting other people's pennies is the least pretty - so what do you do about people who expect you to take them out (every time you go out with them)? And what if they think they deserve nice things, but you don't (in regards to who has what)? They get bitter about what you have, but expect you to be happy for them - how do you react?

Surely you run into this, especially if you have more money than your friends. I can't see paying for everyone each time you go out. We don't go out much, but really.

I'm not the person you asked this of, but if you don't mind I'll answer. We don't stay friends with people who are leaches. One of my DD's is friends with a girl who is very poor. We have taken that girl on two trips, we have her sleep over often, we gave her a North Face jacket my DD outgrew, etc. It might be easy to think the girl is a leach. Except that each time the girls are out and the other girl has something (a snack, etc) she offers to share with DD. She's a good guest who always says thank you for having me. After the two trips, she wrote us a thank you note.

I don't understand your second question - are you talking about family? I have friends at all income levels. Some friends I go out to pizza with. Some friends I go out to a steakhouse with. It all works out. I'm a pretty good judge of character, and if someone is a leach I can suss that out pretty quickly, and we drop them.

[Anonymous]

I worry about this too. I grew up very comfortably in NYC, but we also certainly didn't feel "rich" because life was so expensive. (My parents were professionals, but our biggest expenditures were clearly housing-related, which is just not something you really internalize as a kid.) My dad was very conservative with money (i.e., went to multiple grocery stores to get the best priced/sale items at each one, even though he didn't "have" to). My mom through around money at little things, but was more likely to say that a "big" thing was out of the question due to its cost.

We live within our means (HHI of $250K in DC) except that we have a nanny for our two under 3s who is wiping out our non-retirement savings for 2 years for idiosyncratic schedule/health reasons (daycare is a nonstarter, unfortunately). We will be back to self-sustaining after school begins without any issue, however, and are lucky enough that we won't have to go into debt.

My brother, OTOH, grew up the same way as I did and is ridiculous. Talks about money all the time. Wants the newest and the best. Spends on ridiculous things to the point that he's not in debt, but has no savings at all (including retirement) despite not having kids yet (but wanting them). Chooses his job based solely on income. Etc. I love my brother, but when it comes to money, he's exactly what I don't want my kids to be like.

[Anonymous]

Anonymous wrote:Seasonal "clothing" budget

Thanks for clearing that up. I was wondering what a "seasonal soothing budget" was. It sounded intriguing!

[Anonymous]

Anonymous wrote:I think all of the people posting that they act like they have less money than they have or hope their kids don't realize that they are rich don't make any sense.

I grew up very comfortably UMC (7 figure HHI), and DH and I are now UMC as well though probably earn slightly less than my parents did at our age ($600K HHI). My parents, both MDs, were very conscious of the value of a dollar but did not attempt to hide from us that they were well off. We were not allowed to just buy whatever we wanted (nor did they), but the reasoning they gave was never, "We can't afford it."

When we were young children, it was just clear to us that there were limits on how much stuff we could have/buy. It never would have occurred to me to wonder why I couldn't have a new toy every time we went to the store or whatever, it was just what we did. My parents also didn't just get new things all the time for no reason...and I also never felt deprived. When we were older, they were more explicit in saying that things weren't worth the price etc. It was also apparent to me by then that my parents were wealthier than some of their friends (they had 2 incomes and most of their friends had 1), but we were actually less indulged/spoiled than many of their friends. It's funny because my mom did always spend on high quality necessities, like expensive clothes always bought on sale. But we were not just given silly things we didn't need willy-nilly.

There are many oddities around how my parents handled money, but I think the idea of being upfront that they were choosing not to spend money that they had was valuable. When I was a grad student living on a $18K/yr stipend in an expensive city, I didn't find it difficult to manage my money and live on beans-and-rice without going into debt. By contrast, a couple of friends who grew up with parents who were forever using expense as an excuse not to do things (even when it was clear they could afford it), ended up in debt very quickly after graduating college.

If you are affluent, there is a decent chance your kids will end up that way too. The best gift you can give them is that whether you are able to afford something should not be the motivating factor of how you make spending decisions.

I think that's easier to do when you have younger kids. Once they reach a certain age the jig is up, you know?

Our kids grew up visiting DH's parents mansion in Connecticut, their beach house in the Hamptons, their condo in Park City, UT. But they didn't really understand the concept of money until they were around 8. Until then, $1 was a TON of money to them and they considered themselves to be "rich." It was when they started learning about money in school that things started clicking for them. We never tried to hide it, but didn't make a big deal out of it, either. We explained that money is a personal and sensitive subject that you don't talk about with others.

Most of my kid's friends are form HHI families. Some have budgets and some get whatever they want when they ask for it, or have access to a parent's credit card. My oldest has one of my credit cards that she can use for gas and that's it. She knows I check the statement and would call her out on an other purchases. DH and I both agreed that we did't want to raise entitled little shits. We did a combination of his upbringing of getting an allowance and having to manage that and my upbringing of only getting gifts on certain holidays.

I have some friends who will not be paying for their kid's college education because they want to make them earn it. DH and I don't believe in that and are paying regardless of what path they choose to study. DH had his education paid for and mine was financed through scholarships and loans I took out. Our HHI means that our kids will get very little financial aid; they may score some scholarships, but that's even doubtful. I don't understand the parents who can pay for their kid's college but refuse. Why straddle them with unnecessary debt so early on?!

[Anonymous]

I agree that keeping kids in the dark is a disservice. But it is also a lost opportunity to teach them a life skill.

We not only don't hide it, but include our DS11 in household investment decisions. We want him to know what is in his trust and in our household vestment accounts so that he knows how to manage it when the reins get turned over.

For example, we included him in our recent discussion about whether to sell a house and redeploy the assets into stock investments. As a family, we kicked around the pros and cons and made the final decision to do it.

He doesn't get an allowance - we tried it, but he just hoarded the cash. Instead, he has a small portfolio to manage independently (but with input, of course, if he wants).

[Anonymous]

Anonymous wrote:Live by example. If you have a huge house, fancy cars and the latest gadgets of course your kids will expect and want them. We live modestly with older cars, don't flip our gadgets that often and a small house. Most stuff gets bought on clearance or sale. We clip coupons (don't necessarily need to by why spend the extra money when we don't need to when there is better use for it).

I don't agree with kids paying for college. I think they should work summers and use that money to contribute to college but its a bit extreme to make them pay for applications and college. Paying for education is our responsibility to give them a good start to life.

This is a lot like us. Live your lives the way you want to see your kids live theirs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think all of the people posting that they act like they have less money than they have or hope their kids don't realize that they are rich don't make any sense.

I grew up very comfortably UMC (7 figure HHI), and DH and I are now UMC as well though probably earn slightly less than my parents did at our age ($600K HHI). My parents, both MDs, were very conscious of the value of a dollar but did not attempt to hide from us that they were well off. We were not allowed to just buy whatever we wanted (nor did they), but the reasoning they gave was never, "We can't afford it."

When we were young children, it was just clear to us that there were limits on how much stuff we could have/buy. It never would have occurred to me to wonder why I couldn't have a new toy every time we went to the store or whatever, it was just what we did. My parents also didn't just get new things all the time for no reason...and I also never felt deprived. When we were older, they were more explicit in saying that things weren't worth the price etc. It was also apparent to me by then that my parents were wealthier than some of their friends (they had 2 incomes and most of their friends had 1), but we were actually less indulged/spoiled than many of their friends. It's funny because my mom did always spend on high quality necessities, like expensive clothes always bought on sale. But we were not just given silly things we didn't need willy-nilly.

There are many oddities around how my parents handled money, but I think the idea of being upfront that they were choosing not to spend money that they had was valuable. When I was a grad student living on a $18K/yr stipend in an expensive city, I didn't find it difficult to manage my money and live on beans-and-rice without going into debt. By contrast, a couple of friends who grew up with parents who were forever using expense as an excuse not to do things (even when it was clear they could afford it), ended up in debt very quickly after graduating college.

If you are affluent, there is a decent chance your kids will end up that way too. The best gift you can give them is that whether you are able to afford something should not be the motivating factor of how you make spending decisions.

I think that's easier to do when you have younger kids. Once they reach a certain age the jig is up, you know?

Our kids grew up visiting DH's parents mansion in Connecticut, their beach house in the Hamptons, their condo in Park City, UT. But they didn't really understand the concept of money until they were around 8. Until then, $1 was a TON of money to them and they considered themselves to be "rich." It was when they started learning about money in school that things started clicking for them. We never tried to hide it, but didn't make a big deal out of it, either. We explained that money is a personal and sensitive subject that you don't talk about with others.

Most of my kid's friends are form HHI families. Some have budgets and some get whatever they want when they ask for it, or have access to a parent's credit card. My oldest has one of my credit cards that she can use for gas and that's it. She knows I check the statement and would call her out on an other purchases. DH and I both agreed that we did't want to raise entitled little shits. We did a combination of his upbringing of getting an allowance and having to manage that and my upbringing of only getting gifts on certain holidays.

I have some friends who will not be paying for their kid's college education because they want to make them earn it. DH and I don't believe in that and are paying regardless of what path they choose to study. DH had his education paid for and mine was financed through scholarships and loans I took out. Our HHI means that our kids will get very little financial aid; they may score some scholarships, but that's even doubtful. I don't understand the parents who can pay for their kid's college but refuse. Why straddle them with unnecessary debt so early on?!

Most people are from "HHI families," fwiw.