Growing up is an emotional challenge for any child. Money introduces a new layer of complexity.
If kids don't have to work for money, they might struggle with a sense of direction in life.
They can become dependent and "fail to launch".
They might miss out on the satisfaction of hard work and dedication to a financial goal.
They might worry that their friends are interested in them only because of their money, or they might be tempted to use money to "buy" friendships. These problems haunt kids and breed feelings of inadequacy—or, even more problematic, feelings of superiority to others.
Erin shares,
"Just the other day, my daughter came to me and said, 'Those kids don't want to come to my house because of me; they want to come to my house because of my house.' I was heartbroken. At such a young age, my daughter was wrestling with the nature of friendship and experiencing that her material goods held more value to some than her attributes."
It's right to recognize that kids might struggle emotionally when money comes. A landmark study from Purdue University shows that, beyond a certain healthy level, more money "tends to be associated with reduced life satisfaction and a lower level of well-being."
We all work to build financial capital to invest in all kinds of things that create value. But do you know how to build emotional capital to invest in successful relationships? Consider for a moment: What is your "emotional net worth?"
In life, you also have emotional assets and liabilities. Your emotional assets create happiness—emotional capital—for yourself and those who are important to you. This emotional capital includes the levels of "pride, delight, tranquility, passion, commitment, care, and trust"—and love—people have for you and that you have for yourself. By contrast, emotional liabilities create "anger, hatred, anxiety, and stress" in yourself and others. They deplete your emotional bank account.
Ironically, many high-net-worth families suffer from negative emotional capital. Knowing that your emotional capital is at risk when resources come is a significant first step in fighting against common trends.
So, how can you help your kids navigate the emotional side of money and end up contributing to society? We've compiled a list of strategies I discovered in my interviews to help you raise emotionally resilient kids and protect your relationship with them.
Spend Time with Them
Biddulph says the way to build emotional capital with your family is to prioritize experiences and time spent with your children. He pleads, "To do something: change your working hours or even take a year off to drive around the country. This works even when kids are in high school—I get letters all the time from people. They never regret it. ‘We got to know our kids again,’ they tell me."
Shared experiences create memories that hold sentimental value and make emotional connection and closeness. While material goods can break or get old, fun or exciting times with the family stay with us. Those memories can be among our most treasured emotional assets.
Jed, a successful entrepreneur, says, "Things that depreciate never create happiness, but experiences appreciate over time. It's the notion of compound emotional interest." He takes the family on an annual international adventure. They've visited places like Japan, Morocco, Peru, Nepal, and Singapore. In Nepal, they worked together on a service project that he says was "far more impactful than playing on the beaches in Thailand would've been." On a trip to India with his family, they traveled in third-class trains and explored the impoverished towns. His goal was to teach his children, through direct exposure, that there are several different ways to live. These trips aren't easy to schedule, so he says, "You have to be willing to pick up and leave!"
Spending discretionary money to acquire life experiences makes people happier than spending money to acquire material possessions.
And they don’t have to be extravagant experiences to build up emotional capital, either. Simple time dedicated to your children is the best anecdote to emotional deprivation and an excellent way to build emotional capital on both sides. Time spent reading with them, worshiping, traveling, playing games, or working with them—these are experiences they will treasure more than the stuff you give them. Find those blocks of time with your kids and keep them sacred.
Say “No” A lot
While it's natural to want to do anything and everything to support our children, avoid fulfilling their every request. The word "no" helps them develop realistic expectations in life. It's important to teach children to want and not to get sometimes. "Children learn to be grateful when they don't get everything they ask for."
Erica, a skilled doctor, tells her children, "I love you and will always love you. But I am the parent. That means sometimes you won't get what you want because it isn't best for you." We owe our children tough love, she says. That doesn't mean being mean—it means putting much effort into setting and enforcing rules consistently. It means setting boundaries. Another interviewee applies this when his kids have a big decision to make. Often, they turn to him for advice. He responds, "I love you. I'll listen to you but won't decide for you." This teaches his children from a young age how to think for themselves.
Require Children to Work
Children can only learn specific life lessons with real work, like self-discipline and a sense of accomplishment. Handing out too much money in return for no effort stalls the development of pride in accomplishment. Another interviewee said, "By giving things to my children, I rob them of the pride of doing it on their own." Whether that's as simple as making their bed or making their way in the world, do you want to rob your kids of that opportunity for growth?
In Michelle Obama's book Becoming, she discusses this—though they had an entire staff to clean and take care of daily tasks, she required her kids to do chores while living at the White House. She emphasized teaching them responsibility and instilling a sense of normalcy despite their unique circumstances. Doing chores was part of their routine to ensure they remained grounded and learned valuable life skills.
Set a Good Example
While these are all strategies to help strengthen your children's resilience to emotional difficulties, the best approach is demonstrating resilience. If you want your children to be selfless, exemplify selflessness as parents who restrain your use of your resources. Show your children that you find pride and satisfaction in accomplishments rather than acquisitions.
One interviewee said, "If you are driven, self-reliant, and have high self-esteem, your kids will likely be the same. But if you have been financially enabled, are codependent, and have low self-esteem, then your kids are more likely to be the same."
This is true for any core attribute. If you want to instill a sense of anything in your children, an efficient way to move the needle is to model that behavior yourself. Above all, model gratitude yourself: talk about how grateful you are for them, the prosperity you enjoy, and the love of others in your life.
Love Them
The best way to build up emotional capital is to stay close to those you love. Ask them for their opinions and then listen, particularly about their friends, their feelings, and critical issues like alcohol and drug use. Avoid lectures. Just listen. This way, you can make them comfortable discussing essential things without fear. Be ready to talk about your own experiences when discussing things with your children. By being a human to your children, you can relate and form a relationship that helps increase emotional capital for both parties.
As you continuously show that you love and prioritize your kids over your material possessions, they will learn their value and feel your love for them.
By saying no and teaching them hard work, you will be able to build up some resiliency against some of the money's greatest pitfalls, like entitlement or feelings of superiority. Setting a good example for them gives them behavior to model that will set them up for success. When it comes to your kids, there are few things as important as investing in emotional capital.
