How to give your children financial stability and eliminate the entitlement mentality

This is a guest post by Cameron C. Taylor, author of Does Your Bag Have Holes? 24 Truths That Lead to Financial and Spiritual Freedom. You can find out more at DoesYourBagHaveHoles.org

A business owner and church leader shared this experience: “I remember some years ago, a young man and his wife and little children moved to our Arizona community. As we got acquainted with them, he told me of the rigorous youth he had spent as he grew up. He’d had to get up at five and six o’clock in the morning and go out and deliver papers. He’d had to work on the farm and he’d had to do many things that were still rankling [irritation/resentment] in his soul. Then he concluded with this statement: ‘My boys are never going to have to do that.’ And we saw his boys grow up and you couldn’t get them to do anything.”

Avoiding Harmful Help as a Parent

Many parents make the mistake of providing damaging financial assistance to their children. With good intentions, they want to help their children get started in life and offer assistance when a financial need arises. Unfortunately, the result is often opposite to the one desired. Instead of helping children become self-sufficient, the children become dependent. Rather than sparking initiative and discipline, they become idle and indulgent. Instead of being achievement oriented, they become entitlement oriented. Instead of becoming grateful, they become demanding. “Children who always get what they want will want as long as they live” (Fred G. Gosman, Spoiled Rotten , (New York: Villard, 1992) p. 32). Research has shown that “in general, the more dollars adult children receive [from their parents] the fewer they accumulate, while those who are given fewer dollars accumulate more” (Thomas J. Stanley, William D. Danko, The Millionaire Next Door , (New York: Simon & Schuster, 1996) p. 142–143).

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Eliminating the entitlement mentality in children

How can we make sure our children grow up with the earning mentality rather than the entitlement mentality? One of the best ways to create an earning mentality in our children is to teach them how to work. However, there is a growing trend of fewer and fewer children working. As parents are providing financially for all their children’s needs, many children are no longer working during the summer. In 2007, for the first time on record the majority of U.S. teenagers were not working or looking for work at the beginning of the summer. Only 49% of teens age 16 to 19 were working or looking for work in June 2007, a steep decline from the 68% of teens working or looking for work in June 1978 (Barbara Hagenbaugh, “More Than Half of Teens Forgo Summer Jobs,” USA Today, July 9, 2007).

There is another trend that I believe is tied to the trend of fewer teens working at jobs. As the number of teens working has gone down, the number of adult children retuning to live with their parents has increased. Census figures indicate that more than 80 million so-called “empty nesters” now find themselves with at least one grown child living at home (Roberta Rand, “When Adult Children Move Back Home,” Focus on the Family). The common parental expectation of having an “empty nest” has given way to the reality of a “crowded nest.” And a recent survey revealed that 25% of the college graduating class expected to live at home after graduating (Sheila J. Curran, “The Adult-Child Comes Homes,” Duke University News, July 21, 2006).

To help teach children good work ethics, parents need to look for opportunities for their children to work. I have a 6-year-old son and he never asks me for money. When there is something he wants, he asks me for jobs he can do to earn the money to purchase the item. He has learned that Mom and Dad will not give him money, but that money has to be earned. I have him help when I do various mailers for my companies. When I come home with the mailers, my son is so excited that he will often yell something along the lines of, “Yes! Dad brought home mailers.” It is fun to see a 6-year old so excited about working and earning money.

Parents should also create a financial environment that requires their children to work and earn money by having a job outside of the home to pay for their expenses in their youth and pay their own way through college. I’ve found that those who had jobs outside of the home while in high school and college have a stronger work ethic than those who did not. Having noticed this trend leads me to believe that teaching a child to work is not simply teaching them how to complete tasks or earn money, but it is teaching a way of life. Now as I hire employees, I seek to find those who have strong work ethic by asking what jobs they had during high school and college. The hardest working employees I have had are those who had to work their way through high school and college.

If you keep your children from experiencing struggle and responsibility, you will also prevent them from growing. Work ethic, discipline, and initiative cannot be purchased with money, but instead are developed through work, experience, and education. Living off others is a form of bondage—for if you take from a person his responsibility to care for himself, you also take from him the opportunity to be free. If you help too much, you will make an individual helpless. Do not give your kids money, give them education and opportunity. It costs a lot less and will develop the productive, self-sufficient children you desire.

The Story of the Caterpillar

While starting my first business, I often relied on one of my business partners and mentors who was a multimillionaire for advice. My business was growing, but it struggled to turn a profit. I continued to work hard, but things were getting tighter and tighter financially. I went to my rich partner and asked for a small monthly salary or a loan to help me get by until the business was profitable. He declined to give me any assistance. I was frustrated and said, “You are making millions a year, and I am struggling to stay alive. Please help me.” He looked at me and I could tell he was close to giving in and wanted to help me. “However,” he replied, “If I take away your struggle, I will also take away your victory.” He then shared the following story:

“There was a young boy who came across a caterpillar hanging in a cocoon. He visited the cocoon several times a day, watching it grow and change and waiting for a butterfly to emerge. After a few days, the young boy began to see the cocoon move and watched as a butterfly struggled to emerge. The boy wanted to help the caterpillar so he ran home and got a pair of scissors. He returned and carefully cut open the cocoon and out fell a partially developed butterfly. This caterpillar would never fly as a butterfly. The young boy had innocently killed the butterfly he was trying to help.” At the time, I didn’t find this advice helpful, but today I am grateful to a wise partner and mentor who resisted the temptation to cut open my cocoon.