I first read this fantastic book a couple of years ago and was blown away by all the smart, practical tips in it for parents looking to raise kids who are “grounded, generous and smart about money”. I wanted to condense it for you, because it should be required reading for every parent, for you can adapt what the book says in a myriad ways, that work for your family. Here is my attempt at the 5-minute version of The Opposite of Spoiled by Ron Lieber.
I can assure you that you will not regret reading the book, so here’s a link:
[Ed: This is an affiliate link, which means going through this link will earn me a tiny commission without any increased cost to you.]
If 200-odd pages are too much, read on below.
The principles in The Opposite of Spoiled are so universal because, as parents, most of us want the very same things for our children. We certainly wish them success, but even more so, we hope they will imbibe good values and virtues- for those are the paths to happiness, far more than a fat bank balance.
#1: Why We Need to Talk About Money
Teaching Money, Teaching Values
There is a misguided thought among many parents that talking about money makes kids greedy. Or money-obsessed.
The truth couldn’t be farther.
Conversations about money are also about values. And not talking about it is missing a big opportunity.
Kids are smart and observant. So they ask questions. Very prickly ones sometimes.
People are emotional about money. Economic decisions are often not rational- that’s what the field of behavioral economics is all about. How much money we make, how and how much we spend, how much those around us spend all give rise to different feelings within us.
This makes it hard to be honest and upfront when kids ask us pointed questions about wealth and inequalities they see all around.
But this deafening silence around money is not doing our kids any good. With the new system in place, where young adults, in their 20’s need to juggle student loan payments and retirement savings and insurance premiums on beginner salaries- we need to get our children ready years in advance.
Spoiled
In the author’s research, turns out the one thing parents do not want their kids to be is spoiled. More than mean or cruel or violent. Somehow it feels like we, as parents, have something to do with making a child spoiled.
What defines a spoiled child?
A child who has no responsibilities or rules set by grown ups. And those grown ups hover about them and shower them with material possessions.
The Opposite of Spoiled
There may not be a word for it, but we know one when we see one. Some qualities that comes to mind as the opposite of spoiled are: generous, curious, patient, perseverent and grounded.
Lieber ends the chapter with so much eloquence that I’m just going to quote him here:
“… there’s no shame in having more (money) or having less, as long as you’re grateful for what you have, share it generously with others, and spend it wisely on the things that make you happiest. It’s true for our kids, but it’s true for us, too”.
Amen.
#2 The Money Conversations
The reason kids ask money questions is because they’re supposed to. Kids are trying to figure out the world and money is part of that world.
So why the silence?
- Parents often don’t know where to begin.
- Or what’s age-appropriate.
- We are stumped by the enormity of the subject.
- We either feel we’re not making enough money and don’t want to face up to our kids on this.
- Or we feel we have too much and the kids may call us out on our priorities and spending- when we’re supposed to be their role models.
- Some think money’s private and none of the kids’ business. But being part of the family, it is very much their business.
- Some parents want to “protect” the kids from this stuff and let them be children for a little bit longer. This is naive because if the information doesn’t come from you, they’ll get it elsewhere. And not just about money.
- Money being a taboo subject is sometimes learned through the generations. During the Depression era, money often signified trouble and people learned not to bring it up at the dinner table.
- And sometimes money is seen as a source of conflict- if parents themselves have witnessed fights at home growing up.
Dodging the Bullet
So what do parents do? They dodge the question. Either lie about it and say something like “we can’t afford it”. Or they give the even more anxiety-provoking response, ” there’s nothing to worry”.
A Good Question
Nobel laureate Isodor Rabi credits his mother for him becoming a scientist. Every single day after school, she asked him if he’d asked a good question today.
Let us make our schools and our homes “places of intrigue”, as the author puts it- where curiosity and the thirst for knowledge are welcome and no question is snubbed.
“Why Do You Ask”
“Why do you ask” is a great answer to begin with, for many a question. It often turns out kids are not that interested in your net worth. they may simplify asking because someone said something at school and they want to see where their own family stands in comparison.
Or maybe they heard something on the news, about the economy tanking or something like that- and they just want to be reassured that their world is not about to be rocked.
This Includes the Girls, too
This should need no mentioning, but a reminder is always good: please include your girls in all this money talk. Because you want them to succeed just as much as your boys. And because the differences start early.
- Folks talk to their sons about investing and 401(k) and to their daughters they talk about charitable giving.
- The wage gap starts early: teen boys earn about $500 more on average than teen girls from jobs and chores.
- Girls notice all of this. They bring down their expectations from life. Girls project their starting salary will be about $66k. The boys? They expect to start with nearly $80k.
The Questions
Next the author delves into the tricky questions kids most often come up with, rich with anecdotes to illustrate them.
“Are we Rich or are we poor?”
As always, begin with why there’s asking.
What bring this on is often a kid noticing stuff that their friends may have that they don’t or vice versa.
“Are we poor” is relatively straightforward to answer. You can be direct and truthful in saying no. Poor people cannot afford things they need– like food and shelter.
When a family faces financial trouble, such as a parent losing a job, kids worry their worlds will upend. A reassurance from our side that we will do all we can to least disrupt everyone’s lives, goes a long way.
As for “rich”, try to define the term together with your child. Is it all about material possessions? How about intangible things… like a wonderful family, or great friends? Or innate qualities like grit?
It also helps to remind them that in the end, it may not matter as much. A friend who is kind and funny and generous is more fun to be around than one who has lots of things.
The Accusations
There are a bunch of questions that feel like accusations.
Why don’t you make more money? Why don’t we have a nicer house? Why don’t I go to private school? Can we go on a trip? Why did you guys get divorced?
These are tough questions and it’s okay to take your time with them. But circle around and level with them. They will appreciate the trust.
Also, it helps to remember that they’re not trying to attack you. They are really trying to figure out how you, as a grown up, take these very important decisions in daily life.
Many of these are conversations about your value judgement. Stand by your choices, and own them.
“How Much Money Do we Have?”
Kids are often not looking for your net worth, per se. They want a framework of comparison with their peers.
This is a fantastic question to kickstart the conversation regarding so many important principles. Teach them some basic accounting or budgeting.
Start with monthly household expenses. The mandatory ones first, then the discretionary ones. And what’s left over and what you put that towards.
Another point to put into those little noggins is the value something brings. Do they still remember what they ate a the restaurant last month? Was it worth spending the money?
By the time they are in high school, we might want to share our income more openly with them. After all, they are on their way to college and will soon be making big financial decisions. By this time, most teens understand the need to keep this information to themselves.
#3 The Allowance
Giving kids an allowance and all the rules around it make for some lively debate. Because this is at the intersection of parenting and money, it gets everyone all ruffled up.
Basically, there’s a group who believes kids’ allowances should be tied with the chores they do at home. To learn work ethics and that money comes from work.
The other group believes that doing chores is being part of a household and that there are better avenues to learn good work ethos: school, athletics and summer jobs.
The author belongs to the second camp. He believes the best part of an allowance is learning delayed gratification. Which, as we all know is vital to financial success.
Ron Lieber suggests we start an allowance for our children really young, but latest by first grade, at about 50 cents to a dollar per year of age. And give them a raise every year on their birthdays.
He uses three clear plastic containers for his daughter’s allowance, one each for Spending, Saving and Giving, in equal proportions.
To warm young kids up to giving, think about it as sharing with those who may need the money more than you do.
Another tricky part to this is defining what comes out of the allowance and what doesn’t. Basically, what is a need and what is a want. Each family will decide it differently and you should still expect lots of negotiation.
As time goes on and their allowance money becomes too much for a jar, try an app such as Allowance Manager or FamZoo. Consider a checking account and a debit card for older kids.
In the end, we would like to instill an entrepreneurial spirit into our kids. We want them to see Money Making = Problem Solving, rather than an exchange rate for your time.
#4 How to Spend Money Wisely
Now that the kids have some spare cash to burn, how do you instill in them the best use of that money?
How do you teach them that spending it wisely will bring lasting joy while squandering it foolishly will only accumulate junk. Well, some of it has to be learned from experience. and an allowance allows that with small amounts of money.
It helps to remember that shared experiences are the best spending category. The memories created last a lifetime and strengthen relationships.
Kids need to be “thrifty”- in the right way and to the right measure. The author explains how the word comes from the root word “thrive” and tells us it is the quality that will help them thrive no matter what circumstances they grow up to be in.
Some creative ways to see how our purchases measure up are the “Fun Ratio”: how many hours of fun per dollar something buys us.
Another is the “Least Harm/Most Good” principle: support local businesses and products and those who are trying to do some good.
And sometimes, it is a good idea to take a break from things- whether you assign a religious reasoning to it or not- just to remind us that many of these things are only wants, not needs.
It is certainly hard to stay grounded, in this age of instant gratification and “vertical expansion of our reference group”- where we are bombarded by the lifestyle of the rich and famous on social media and elsewhere.
We will continue with the next chapter of the book in next week’s post.
What do you think so far? I am looking forward to your comments below. Thank you for reading!
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