Steven D. Hayworth, chief executive of Gibraltar Private Bank and Trust, is thrilled that his daughter will be working this summer at a women's clothing store before heading to college in the fall. It is not the particular job that pleases Hayworth. Rather, he is hoping his daughter will make the connection between how much she earns each day and what that will buy.
"As a parent who has worked his whole life and has had a little bit of success in my career, one of the huge life lessons I learned early on is the value of a dollar," said Hayworth, whose bank is based in Coral Gables, Florida.
"Particularly for children of upper-middle-class and affluent families, there's no perspective on value. When the new Range Rover pulls into the driveway, there's no concept of how many hours of hard work went into owning that vehicle."
Unlike many college bound children today, Hayworth's daughter would have had no worries if she had not been able to find a job. She could have spent the summer by the pool knowing her parents had the money to put her through college.
But the fact that she does not have to work is exactly what worries Hayworth and many other affluent parents. The recession and tight job market have made it imperative to teach their children the value of work. They worry about that, it seems, more than about any short-term swings in their portfolios.
"This is a tremendously confusing time for families," said Matthew E. Brady, head of wealth advisory in the Americas for Barclays Wealth.
A whole coterie of experts has sprung up in the last few years to coach the children of affluence into the working world.
Gibraltar offers classes in "financial life skills" that cover topics including saving, preventing debt and how money affects friendships. JP Morgan Private Bank offers what it calls "Next Generation Leadership" seminars.
This may seem unnecessary, unfair or worse to parents with fewer means and just as many concerns about their children's futures. But the central issue for all parents is the same: how do you raise children who are productive? With summer near, this is a good time to review how parents can truly help their children.
Parents of various means are facing the prospect of adult children who have to move home because they cannot find a job.
House rules
Brad Klontz, a financial psychologist and co-author of Mind Over Money (Broadway Business, 2009), said parents should set ground rules from the outset, including charging children rent. Without rules, there is a risk of what he calls "financial enabling."
"It's financial help that hurts," he said. "You condition them that there will always be enough money — whatever my needs are, they will always be taken care of."
In charging them to live back under your roof, you are also forcing them to become aware of expenses, which many of them may know little about.
"You have to help a kid understand what it means out there," said Joline Godfrey, chief executive of Independent Means, a consultant in Santa Barbara, California, that focuses on financial education. "You can't expect kids to go out in the world and be self-sufficient if they don't know what a utility bill is."
Parents usually mean well when they try to help their children financially. They do not want their children to fail or they want their children to have a better life than they had. But providing too much can hurt children.
This is not just an issue for college-age children. When children are younger, overscheduling them into after-school and summer programmes robs them of the chance to accomplish things on their own, said Debbie Cox, managing director at JP Morgan Private Bank in Dallas. "They don't have time to get into the community on their own," she said. "Kids just don't have time to get a job any more."
Formal education
Hand in hand with this is parents' obsessive focus on formal education. It often comes at the expense of what Cox calls social and financial education. One thing a tough summer job market could be good for is improving children's social education: volunteering is perfect for this and better than hanging out with friends.
"They need to learn what it's like to get up every morning and get to that job and help someone with something," Cox said.
Another bad thing for parents to do is always to solve their children's problems. Todd M. Morgan, senior managing director at Bel Air Investment Advisors, a Los Angeles-based company that manages $5 billion (Dh18.3 billion), said the tendency among successful executives was to step into their children's lives and fix things as they would in a boardroom. "Do not offer to fix or change something unless you've been invited to do it," he said.
Morgan, who admits to having made this mistake at times, has a motto he shares with clients, "Don't make the person feel powerless; empower them to make their own decisions."
Good help
So what is the right way to help a child struggling to find a job or a career? Godfrey said it could be difficult to get children started, or what she calls "launched".
"The more we got into it, the more we realised that these were kids who are educated but are having a tough time getting into a purposeful path that will help them maintain their lifestyle," she said.
She urges families to set two goals: get children living without subsidies and put them on a career track. "Those families that treat their kids' launch like any other endeavour are having the most success," she said.
This means parents and children need to discuss expectations. If financial help is involved, it cannot be infinite and that must be explained. But most of all, parents have to realise there is more to be done than just educating their children.
"Seriously middle-class families have said for a long time that the investment I've made in you is giving you a good education and then you're on your own," Godfrey said. "But now these families are realising they have a great education, but yikes, it's tough for them to be on their own. Now it's not how much money you have, but how big is your network and how can you connect them."
Klontz said a good way to help is to pay a career counsellor for guidance. "What isn't helpful is, ‘Here's a cheque,' " he said. "Once you get them on the parental dole, it's hard to get them off."
Hayworth knows his daughter still has a lot to learn.
"She's not financially competent yet, but she's sensitive to the issue," he said. "On a day that she doesn't sell a lot, and her feet are sore, she'll recognise, ‘I made $80 gross and my take-home is $60.' Then she'll say five times $60 is $300, and a decent apartment is $800 a month. That's when you start to think about financial competency."
