Why your kids expect to be rich

It's the media's fault. I usually disdain arguments that blame "the media" for anything. For one thing, "the media" isn't one big monolith, despite Rupert Murdoch's best efforts. For another, most media outlets are so chaotic and disorganized they have a tough time organizing annual company picnics, let alone a vast conspiracy.

But there's no question we're bombarded with details of the lives of the rich and famous. Those who consume a steady diet of such pap can get a distorted idea of what's normal.

It's society's fault. Our whole society, and our economy, is built on the idea that "money will make you happy," said attorney Jon Gallo, co-author with his wife, Eileen Gallo, of the book "The Financially Intelligent Parent." "It's part of our cultural ethos. . . . These teenagers are just epitomizing that."

In reality, money doesn't add much to people's happiness once they're raised above the subsistence or poverty level.

"Money does make a huge difference when you're talking about going from $8,000 a year to $30,000," said Gallo, citing the research of Harvard psychology professor Daniel Gilbert, who wrote "Stumbling on Happiness." "Between $50,000 and $500,000, though, the difference is scarcely measurable."

Many of the things that do make us happy, such as a sense of purpose and strong relationships with family and friends, don't necessarily add much to our nation's gross domestic product. In fact, Gallo joked that our economy "would grind to a halt" if people gave up the idea that happiness lies in more money and more stuff.

It's the parents' fault. Have you ever traded in a perfectly good used car for a newer one? Bemoaned your financial state and wished out loud for a raise -- or a winning lottery ticket? Expressed envy about someone else's income or lifestyle?

And you're wondering why your kids are so darned materialistic?

Children are awfully good at picking up the messages we send them, consciously or otherwise, said Mary Hunt, author of several books including "Debt-Proof Your Kids." If we believe "more is better," they're likely to believe that, too -- and they often don't have the real-world experience to understand that money is a limited resource and that every expenditure has consequences.

"They watch their parents swiping plastic, living on credit, keeping up with the neighbors," Hunt said. "Kids learn through observation and emulation, and without allowing them to experience suffering, yearning and delayed gratification, they grow up with unrealistic ideas of what life it really about."

3 things parents can do

So what's the antidote? Most of us parents don't want to quash our children's dreams, but there are ways to tune them into reality. For instance:

Talk with your kids about their career aspirations. Once they get beyond the "I want to be a ballerina-veterinarian-astronaut" stage, you can start having real conversations about their interests and what jobs might suit them. Research together what those jobs actually pay, advises Kristine Dixon, Schwab's director of consumer education. You can get average hourly earnings for different professions from the U.S. Department of Labor's National Compensation Survey or see typical salaries across the country with Salary.com's Salary Wizard. Contrast that with what people typically spend on shelter, food, transportation and other living expenses in your area. (If you're comfortable revealing details of your family's finances, you can show them what you spend.)

Give your kids some hands-on experience with money. If the only money experience your children have is knowing how to successfully nag you into buying something, they will be woefully unprepared for the real world -- either that, or you'll still be supporting them when they're 50. Better to start turning chunks of cash over to them now, either in the form of an allowance or in payment for work around the house, and let them make decisions on how to spend it. As one poster on the Your Money message board put it, "Let them learn when a lesson is cheap." By the time they're in high school, they should be assuming more responsibility for their own living expenses, as I wrote in "Why allowances don't work."

Adjust your own attitudes about money. Recognize that even if you do win that raise, or that lottery jackpot, you'd adjust pretty quickly to the improvement in your circumstances and would soon want even more. That's not to say you shouldn't be ambitious or want to improve your family's financial circumstances -- far from it. But expecting money to be the magic-ticket solution to all your problems is just as unrealistic for you as it is for your teenager.

Liz Pulliam Weston's latest book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated Oct. 2, 2008

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