Kids and Money: How Not to Raise a Spoiled Brat

Adam Sandler is the latest rich guy to agonize over his spoiled kids, calling it "difficult" to raise children when you have so much money. Sandler, star of The Wedding Singer and The Waterboy, should know. His net worth is estimated at $300 million even though he hasn't done anything truly side-splitting since The Chanukah Song on Saturday Night Live in 1994 -- until, that is, speaking of his kids and money anguish he uttered this gem to Showbizspy.com: "I go to sleep thinking about it and I wake up thinking about it." When does he find time to make movies?

Some rich people make such a big deal of the potential damage their mammoth estate will do to their offspring's ability to walk and chew gum at the same time that you just want to scream, "Give it all away if it's so darn tough." Personally, I like rapper The Dream's 'tude on being wealthy with kids. He's got four little ones, three of whom came before he hit it big penning Rihanna's Umbrella. Speaking of kids and money and raising No. 4, he told People: "this time's easier because I'm rich now." I'm inclined to believe him.

Still, I've been at this long enough to know that the parenting agony of wealthy folks like Sandler is real -- and their super-sized concerns over bringing up lazy brats often resonate down the income spectrum to the moderately affluent and even plain old working stiffs who wonder if they just might be making things too easy for their teens. Heck, I think about it. I want to make sure my kids understand that success at anything takes genuine effort and that there is no satisfaction greater than earning your keep. I've seen people close to me get the wrong signals and wind up dithering away years waiting for their inheritance only to be crushed when Dad married a younger woman or the stock market took it all. I've seen people close to me grow irrelevant and lonely after they got a pile of cash and either blew it or lost their purpose.

Billionaires Warren Buffet and Bill Gates have struggled publicly with how much to leave their children, and each of them have settled on giving away the vast majority of their fortunes. Microsoft co-founder Paul Allen is going a similar route. These money giants believe that too much inheritance not only destroys a person's work ethic but also robs them of happiness because no normal person can be satisfied without a sense of achievement. Buffett has been most eloquent, saying that "a very rich person should leave his kids enough to do anything but not enough to do nothing."

But what should normal people do? Here are four steps to raising a responsible child:

1) Put your child on allowance at once. I don't care if she's four, 14 or 24. If you are supporting her she needs to be making age-appropriate financial decisions and suffering the consequences when she does not do it well. At a young age allowance should be small and weekly, and meant to cover incidentals like candy and movies; at an older age it should be large and either monthly or quarterly, and meant to cover everything you are willing to pay for. No bailouts. That would only reinforce the notion that she'll always have a backstop and doesn't need to fend for herself.

2) Encourage delayed gratification. Studies show that children and teens who learn to save in the short-term in order to meet a long-term goal tend to make smarter decisions throughout life and achieve higher levels of success and happiness. Impulse spending takes you down the opposite path.

3) Talk about your family values. Let the kids know that there are more important things than money and materialism-like relationships, experiences and personal growth. Talk about the charities you support and encourage them to volunteer with you or to do something for a cause that matters to them.

4) Cut them off in their early 20s, no matter what. This can be tough. But you have to do it. That means no more scheduled financial support. They need to make ends meet with whatever resources they can muster on their own. Author Dave Ramsey says that kids who are forced to go it alone by their mid-20s end up, on average, earning 20 percent more over their lifetime than kids who are coddled into their 30s. You can still buy them stuff. But it should be stuff they could afford on their own -- not elevate their lifestyle -- and it should be irregular so that they cannot enter it into their budget.

Photo by davef3138 from flickr