Entitled Kid Syndrome… Our 4-Part Preventative Strategy

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“Wow, that’s one entitled kid for sure!” Words you don’t ever want to hear about your child.

We’re blessed to have saved enough money to be able to enjoy early retirement. As a millionaire family that doesn’t live extravagantly, a lot of the money stress tends to subside (though not completely).

It’s been wonderful to be able to spend my days with my wife and daughter. In fact, being able to be a bigger part of my daughter’s life while she grows up was one of the biggest reasons I wanted to retire in the first place.

Our daughter, Faith, is 12 now. She knows we have money – more than a good percentage of America. She understands that we don’t need to work again if we don’t want to.

Every parent wants the best for their children. Generation after generation tries to do “one better” for their kids if possible. They want to give their children everything.

The problem is that in most cases, money tends to be the root of entitlement. Money has the potential to lead to a path of privilege that you might not encounter otherwise.

So when you have a decent size pot of money to draw from as a parent, that presents a possible obstacle – how do you give your child more without raising an entitled kid?

That’s a real concern and one that I’m acutely aware of as part of this child-rearing roller coaster of fun. My job as a parent is to find that balance of giving my daughter a good life (which doesn’t necessarily just mean spending) while ensuring that she doesn’t become an entitled kid.

I don’t claim to be some know-it-all expert in this arena. However, I consider this an important part of parenting and something I actively aim to prevent. No one wants to raise an entitled kid and so far, I think we’ve been doing a good job on this front if I do say so myself.

Here are some of the ways we strive to prevent our daughter from having that mindset of privilege and entitlement.

We talk about money… a lot

I think one of the fundamentals of ensuring you don’t end up with an entitled kid is to first ensure they understand money from different angles.

If a child realizes that money gets her what she wants and they think there’s an infinite amount at their fingertips, that’s a recipe for failure. You’ve failed your job as a parent if your kid becomes an adult with that sort of mindset.

So there’s a lot of transparency about money in our family. The books are completely open here and I put forth an effort to ensure Faith understands what we have – and what we don’t.

All our assets and liabilities are kept up-to-date automatically in Empower (formerly Personal Capital), a great free tool for managing your money. Periodically, I like to show her parts of our investments in the software so she can understand more about what the numbers actually mean.

She knows we’re millionaires (Lisa and I are, not her!) and I talk repeatedly about safe withdrawal rates. She might not understand every detail but she knows that we only have around $45-50k to cover our expenses each year. She knows what our rent payment is and some of our shopping costs are, for example.

Sometimes she’ll actually “reprimand” us when we go to spend what she thinks is too much money for a bigger purchase like a vacation… I like that. We’ve raised her to be cognizant about money coming in and going out, which is important.

I also do a personal finance lesson with her every week as part of her homeschooling. This allows me to instill other points of view about how money works with her. Not only do we talk about things she needs to understand for her future financial life, but we also discuss what others tend to do – both right and wrong. This gives her more breadth in her understanding of the world and how people tend to think.

On the other side of things, we try to be diligent in explaining money’s role in life. Money’s extremely important… when used as a tool to leverage in life. But it can’t be your only focus and the sole motivation in life. This is an extremely important (and sometimes difficult) concept to understand and relay, but it can be vital in preventing an entitled kid.

She sees the other side and we discuss it

I don’t believe you can force compassion on a person. However, I do think that if someone experiences being among the less fortunate periodically and see what they go through, it’s hard not to feel empathy.

While we were living in Boquete, Panama, we noticed an interesting dynamic. Unlike the U.S., where you generally see “good” neighborhoods and “bad” neighborhoods, in Boquete, you might see an impressive-looking house (read expensive!) and then what basically amounts to someone living in a shack right next door. There is a lot of that throughout the communities where someone’s class isn’t emphasized as much in where you live as we’re used to seeing in the U.S.

So when we would see people living in homes that are barely standing or places where you might have several families living in a single-room dwelling in Boquete, it’s hard not to feel for them. The same emotions tend to surface with panhandlers that we would occasionally see in town.

We never feel or act as if we’re above anyone less fortunate than us. Anyone can run into troubled times in life and we’re all just people. During the pandemic, Faith and I ran into a Panamanian in town who was out of work (because of the pandemic) and was struggling to afford to feed his family. He did what he needed to do and started baking and selling cinnamon rolls on the streets. I talked to him for a few minutes and Faith and I just gave him some cash though he was insistent we take a couple of cinnamon rolls.

The point is that situations become opportunities for all of us to learn. It’s also a great way to prevent an entitled kid in your family.

Are you looking to create a hindrance to an entitled kid? Just say “no”!

Among a ton of other things, our daughter, Faith, has:

• Been on 4 Caribbean cruises
• Lived in another country for 3½ years (Panama)
• Ziplined through the jungle twice
• Traveled all over the U.S. on two separate 30-40 day road trips
• Spent many days in fancy airport lounges (thank you travel rewards!)
• Had all sorts of other fun throughout the world

She also did horseback riding lessons once or sometimes twice a week in Panama (it’s much cheaper there!) and she’s always been spoiled by her grandparents.

That’s not something a lot of people get to do, much less a 12-year-old kid!

So how do you prevent someone from becoming an entitled kid who seems like she gets everything? You say “no” a lot to make sure that they don’t get everything.

Faith’s been on quite a number of adventures but that’s because she’s tagging along with us. When it comes to things she wants, she’ll be the first to tell you that Mom and (especially) Dad love to say no when she finds something she wants at the store or online.

You want something? Save your money for it. There needs to be a lot of “no’s” in parenting unless you’re hoping to raise an entitled kid.

Making it real and the 50% rule

In line with saying “no” and instilling in your kids that they need to save their own money, it becomes another problem if you’re just handing them money left and right.

My feelings are that it works best if your children have some money but not enough that they could buy a lot of what they want. In other words, if they want something, they should need to contemplate draining a lot of the money they have in order to buy it.

That might not matter the first time around when they spend it all. But there will be a time after when they want something else and the correct answer is, “Well, you spent everything you had on ABC toy so you’ll just need to save up to be able to get XYZ toy.”

Guess who’s hopefully going to do a little more thinking the next time they have money in their wallet after that?

As far as allowances go, that’s different for each family. There are pros and cons to the idea so ideally, you do what works best for your household.

With us, we don’t give a regular recurring allowance. Faith helps out with some cleaning up as a member of the household (no pay involved). Occasionally though, we’ll give her money for specific chores on a per-job basis.

Between that money and the cash she gets from birthdays, Christmas, etc., she usually has a fair amount of money in her wallet.

But wait, there’s one catch… the 50% rule.

Since Faith’s been little, I’ve had in place a rule that she needs to save/invest half of whatever money she gets. As soon as she receives money, she gives me half and I make that happen. Most of the money goes into her custodial brokerage account at Vanguard (invested completely in VTI) and a small amount of money goes into her custodial online savings account at Ally Bank.

On a side note, I match whatever she saves dollar for dollar into her accounts (sometimes called “the Daddy match”). So there’s a nice incentive for her to be saving a lot. We also review her balances routinely so she can see the growth.

The point is that she’s doing the important part – she’s paying herself first. And if she could keep up a 50% personal savings rate over the long run (not the easiest to do), she’ll be set financially for life.

So the other half of the money she keeps is hers to spend. She can’t buy everything she wants with what’s in her wallet, but she can afford a thing or two that she wants. That’s exactly the way it should be. She’s the purchaser (not Mom and Dad) and sees the money come out of her pot of cash. That makes it sting a little more and keeps her conscientious about her spending. Because of that, she’ll usually sleep on the decision to buy something before pulling the trigger.

Sometimes though she’ll be a little too hesitant about buying anything. That’s when we’ll remind her that she’s already saved half of her money so it’s ok to spend this money if there’s something she really wants. Save/Invest first, pay your expenses (essentially nothing as a kid!), and then enjoy what’s left. Following that logic positions you to be happy today and tomorrow.

“Faith, you’ve already saved 50% of your money… the rest is to enjoy today with. You don’t need to spend it all, but when you have something you really want and you’ve considered it for a period of time, it’s ok to buy it.”

Faith understands how valuable money is and she’s willing to work hard for it. She’s still a little young to get a regular job, but it doesn’t stop her from trying different things. As I’m typing this, she just got back from going door-to-door in our apartment building selling bags of kettle corn and popcorn drizzled with white chocolate that she made. Believe it or not, she’s making a pretty good buck on it (her costs are next to nothing)!

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I don’t have all the answers on how to avoid having an entitled kid but these are some of the tactics that have helped us thus far. You never know what kind of changes you’ll see in your children as they get older so who knows for sure? But so far, I’m appreciative of her compassion for others (she gets a lot of that from Lisa) and her reproach on privilege or any feeling that she deserves more than others.

What other strategies would you recommend to help avoid having an entitled kid?

Plan well, take action, and live your best life!

Thanks for reading!!

— Jim