How over-indulgent parents hurt their finances for their children

Is my child growing up to be too entitled, he wondered. The 21-year-old wanted to study abroad and expected the parents to pay his tuition fee, look for a flat for him, and provide a living allowance. This was after arguing that he would not take competitive exams, but would join a private university in a country of his choice. Let’s focus this week on the ultra-indulgent parents and their entitled children.Such parents repeatedly tell children that their lives are dedicated to them. Many are prepared to do whatever it takes to provide what they think is the best for their children. This indulgence begins with birthday parties and treats, moves on to coaching classes and courses of choice, and extends to setting them up and subsidising their adult lives. The less we talk about lavish weddings, the better.Financial planners indicate that children’s education is the top financial goal for most parents. They save aggressively to make this happen. They work well beyond providing reasonably for their children. A combination of factors is at play: parents want their dreams fulfilled by children; they relive their lives through them; they compete in social circles over the accomplishments of their children; they believe that indulging every whim is a mark of good parenting; they suffer the guilt of being away at work and try to make it up to them, opening the door for manipulation. The list that blames the parents is fairly long.I would venture another explanation. We have a culture of parental martyrdom. A good parent is marked by his ability to sacrifice so that his children are better off. We have emerged as a society that stretches this idea too far, where the competition for martyrdom and its glory masks all else. We don’t see parents having conversations about their other goals, aspirations and responsibilities with children. medium nocaptionhttps://youtu.be/nvy6jUtb-P8?si=7zmw3MMVN4MUMCyVChildren grow up without being aware of other demands on the income and wealth of their parents. They do not know that their parents might want to pay for the education of a few lesser privileged cousins too. They may not think much about the parent taking on loans, incurring high-cost credit card debt, or giving up their own goals for career or leisure. In today’s nuclear families, many children are quite nonchalant about parents being indebted or compromising their comfort after retirement.If you are imagining a cruel and heartless child at the centre of it all, you have only a part of the story. The untold part is one where parents have not discussed other needs and willingly give up their share of wealth to fund their children. I can only watch with disdain and alarm when families shop for weddings. Parents simply yield to the tall demands of children without registering any protest. Even if the money is theirs and they have the authority to decide how it should be spent, they exercise no control over the choices.Is it the case then that we live in prosperous times, where everyone earns and spends well? Do parents have the money and willingly allocate it to indulge their children? If we peel off the layers of showmanship, guilt, emotional blackmail and blind love, what explanation would we have for parents spending all or most of their wealth on their children? The answer must lie elsewhere.If one looks at history, there have been two broad kinds of orientations to wealth. One is the pardoning of mindless opulence. In monarchies, the commoners’ understanding was that some are entitled to wealth and its mindless spending, and others should not judge them for this vulgarity. The second is the acceptance of gruelling sacrifice and poverty. During periods of deprivation, we sacrificed willingly and held it up as a virtue. Then we extended it to cover both good and bad times. I pick on these two, out of many other orientations, to make a point. medium nocaptionhttps://youtu.be/CGWUNoZvm5c?si=OqYHIn9lPJBewN8nWhen this society was relatively poor, parents who allocated sizeable incomes to their children’s upbringing expected that they would get old-age care as reward. This quid pro quo was essential at that time. What happens when the society starts to become wealthy, pulling itself out of poverty and enjoying spending power across varying levels of income? It comes up with a combination of indulgence for some (children) and sacrifice for others (parents). It seems right and acceptable. Look around you to count parents who call their children prince, princess, king or queen.Children believe they are more equal than the others in the household, and are indulged in that prime position without question. Parents do not see it as lack of self-worth or esteem when they are denied the right to make choices about their own money. Our money is slave to our sense of who the masters and servants are. We badly need a democratisation of this process.Importantly, there is a vacuum in terms of what else money can do; notice our abysmally poor level of community service and charity. We do not see our money as having the power to change the lives of those around us, beyond the immediate family. We ask the super-rich to allocate money to charity, but we don’t have the social responsibility at all levels, to take our immediate community with us. We still love freebies and dislike paying for stuff, which makes it tougher for us to give.A healthy approach to money requires that those earning it don’t just feel guilt-free about its allocation, but are also able to question its wasteful deployment and regain the power to allocate fairly. Parents are branded selfish when they exercise this authority, and in these days of extremely sensitive young minds, they are mortally scared of turning down a demand. We need more conversations around equitable, fair and just allocation of money. Even if children believe that their parents’ money is theirs to spend as they wish.The author is chairperson of Centre for Investment Education and Learning.