The title might sound strange to you. Why would I feel sorry for ‘Rich Kids’? They are given more opportunities than most people, surely I shouldn’t feel sorry for them. I should focus on the kids who don’t have any opportunities and need to learn about money just to survive.
First of all, I do care a lot about those kids who don’t have money and opportunities. I want to help as many of them as possible. It’s just that I also feel sorry for ‘Rich Kids’.
The best way for me to explain why I feel sorry for rich kids is through a story I told my daughters (which I hope you share with your kids).
Tito, The Richest Kid in School Story
In a school, in a faraway land, there was a 14-year-old boy called Tito. Tito’s parents both came from a poor background but managed to build a very successful business. They were now very Rich. They had more money than they knew what to do with. For them, money was no object.
If Tito wanted something, his parents gave it to him. He had the best toys, the nicest clothes, a swimming pool and got to go on the best holidays. His parents wanted to make sure Tito had everything they never had when they were growing up.
One time they thought they should help Tito learn the value of money. Whilst they were out shopping. Tito told his parents about a toy he wanted and he
expected them to buy it for him (as they always did before). This time his parents said ’NO’.
Tito was in shock and started crying in the shop. "Why won't you buy this for me? Are we now poor?!" Tito shouted. Everyone started looking at him. Tito's parents couldn't believe what was happening. They were so embarrassed. Within a few seconds, his dad got out his credit card and bought the toy to stop Tito's shouting and crying. Tito was happy again. His parents never wanted to go through that experience again.
Everyone at school tried to be Tito’s friend as he would give toys away and invite them to his amazing mansion. He got all the attention and he loved it.
Two kids at Tito's school, Frankie and Kitty, were very jealous of Tito. “Tito's so lucky, he gets everything he wants. My parents make me do a paper round to earn money myself to buy the things I want,” said Frankie. “My parents always tell me they don’t want to buy me things unless I really need it. It’s so unfair” Kitty added.
Then things changed ….
Many years later, Frankie and Kitty got together and treated themselves to a nice meal at an expensive restaurant. As they were eating their food, a big man walked in. He was wearing nice clothes and dark sunglasses. He ordered a very large meal. Not just any old food but the most expensive food on the menu. All the waiters came over to make sure he had the best service.
It was then that they realised it was Tito! It felt just like being back at school again.
At the end of his meal, Tito started making a lot of noise. It was like he suddenly felt sick. He started shouting at the restaurant staff “You’ve poisoned me! You’ve poisoned me!”. He started to fall all around the restaurant, crashing into tables and then fell to the floor. He was still shouting “You’ve poisoned me! I’m going to make sure everyone knows about this. This is the end of your restaurant - no one will ever come back here!”
The restaurant manager came running out. “We’re so sorry. Please, we’ll do whatever it takes to look after you. Please don’t tell everyone about this … we’ll go out of business and won’t have any money. Please. Here, please take this money.”
Just as they were about to hand over the money, an old lady calmly walked over and said. “I have a special mushroom which will cure you from the poison. Take it and you will be fine."
Before she handed over the mushroom to Tito, she added "A warning. If you don’t have poison in you, you will be sick ten times worse than you feel now for at least a month, maybe longer”.
Everyone was expecting Tito to grab the mushroom so he wouldn’t feel sick anymore. However, that’s not what happened.
He stopped shouting and stood still whilst scanning the room. He then quickly ran straight out of the restaurant.
“Why didn’t he take the mushroom?” asked Frankie.
“He must have been pretending to be poisoned and didn’t want to take the mushroom as that would have made him sick for real!” replied Kitty.
“Why would he pretend to be poisoned?!” wondered Frankie.
The old lady replied, “He pretended to be poisoned as he had no money and wanted to get a free meal and take money from the restaurant.”
“No. That’s Tito. He has loads of money!” replied Kitty.
“Unfortunately that is no longer the case" started the old lady. She continued, “I heard that when he reached the age of 18 years old, his parents gave him a large amount of money but then said they wouldn’t give him any more afterwards. He had to get a job and survive on his own. However, the money he was given didn’t last long. He wanted to keep buying all the nice things he was used to wearing and eating. He would also give money to his friends, as that’s what he always did. He felt he was too important to work or wear cheaper clothes. Now he’s run out of money and his ‘friends’ have left him. He still can’t bear the thought of not eating the nicest meals and hence this show today.”
Frankie and Kitty to the rescue …
“Wow - I actually feel sorry for him now," said Frankie.
Frankie and Kitty decided to chase after Tito. They managed to find him sitting and crying in a really expensive car around the corner.
“Hi Tito, do you remember us? We went to school together,” said Kitty.
“Yeah, I remember you. What do you want? I don’t have any money if that’s what you are after. I don’t even have money to put petrol in my car” replied Tito.
“We’ve heard that things have changed for you. Don’t get yourself down. We’ve never had as much money as you had and we have a great life” stated Frankie.
“Yeah, we earn money from our jobs, save some of it and then use the rest to hang out with our friends,” said Kitty. “This evening, why don’t you come with us to a little restaurant around the corner? We’ll show you that you don’t need lots of money to have a great meal.”
That night, Tito met up with Frankie and Kitty at the restaurant. They sat on plastic stools and ate the best fried rice and chicken wings he had ever eaten. They shared stories and laughed the night away. It was then that Tito first realised that some people didn’t care whether he had money or not.
The next day, he sold his expensive car and got a job at the little restaurant. He also bought a copy of Grandpa’s Fortune Fables and learned how to look after his money. He has never been happier!
Downsides of being a Rich Kid
The story is clearly an extreme for effect. I'm not saying all rich kids will end up becoming scam artists 😀
I know a lot of parents who are saving money for their kids and who buy their kids lots of nice things. On the surface, these parents appear thoughtful and kind. However, there are some dangers which they need to be aware of when giving kids lots of money or nice things.
The dangers of not teaching Rich Kids about money:
They live a life which is materially above their own means (so end up spending more than they earn when they are adults)
They don’t have a sense of the value of money (they don't see the difference between their wallet and their parents' wallet)
They are less incentivised to work hard as they already have money in the bank (which can lead to lower earning potential)
They have a strong sense of entitlement (which is likely to damage their self-esteem when they get into the real world of working)
There are limited opportunities to develop the skill of being patient (which is the superpower of the wealthy)
They are more likely to feel that money leads to happiness (which we know is not the case)
I’m not saying parents shouldn’t save money for their kids, as money can make a positive difference (e.g. towards a deposit for their first home). Just make sure that the amount isn't too large that it becomes counterproductive given the dangers listed above.
It's far more important for kids to know how to earn and look after their own money (i.e. follow The 3 Rules of Wealth) than it is for them to simply be given lots of money when they become adults.
The most extreme real-world riches-to-rags story is that of the Vanderbilts. They were once one of the wealthiest families in the world but it didn’t last long. Due to a lack of financial education, the next generations wasted all the family's money. Check out our blog, The Epic Riches To Rags Story: The Vanderbilts.
We want kids to grow up Wealthy, not just Rich. If you're not sure of the difference, then please check out my blog 'Rich Kids vs Wealthy Kids'.
If you have older kids and want to make sure they are ready to look after the money you have been saving for them, then please check out my Money MOT blog.
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Thanks for reading,
P.S. Want to make a difference in the financial future of the next generation? Then consider buying your child, a friend's child, a niece, a nephew, a grandchild or your local school a copy of Grandpa's Fortune Fables.