How not to raise a spoiled rotten brat
The world's most powerful women discuss how to raise financially responsible children in an atmosphere of extreme affluence.
By Cait Murphy, Fortune assistant managing editor

New York (Fortune) -- Every year, Fortune sponsors a conference of women, chiefly from business, but also from politics, culture and charity - 300-plus of the most formidable females around.

Now, I am fairly sure that the intention of the conference is not entirely to make me feel inferior. It does, however, have that effect. And so, I rather relish the moments when these assorted titans of industry (hi, there Pat Woertz!) to glamour (ohmigod, is that Iman?) to Hollywood (yes, that IS Nora Ephron) hint that the problems that beleaguer less gifted mortals are not entirely unfamiliar to them. Case in point: A breakfast discussion on how to raise financially responsible children.

The conference is off the record, so I will not be using any names; you will just have to believe me when I say a number of women in the room were seriously rich and powerful, some of them with eight-figure salaries.

And yet they, like many less wealthy Americans, are struggling with how to raise decent, independent kids when saying, "We can't afford it" is not an option. The fact is, in many cases, kids know, and their parents know they know, that that is not the case. And of course, parents like giving their kids things. That is one of the benefits of wealth, after all.

But at some level, giving too much too often can deprive kids of more important things - the ability to set priorities or make long-term plans; the pride of achievement; even empathy. A teenager with an enlarged sense of entitlement and a credit card is one of the least attractive species on the planet.

So, while I have neither great wealth nor children, I thought some of the strategies that came up were worth passing on.

On allowances: Not a single woman said outright how much their kids' allowances were. Almost everyone, though, paid them; most said that they required some form of effort for it (and yes, I am skeptical of that).

But the most interesting tweak came from a mother of grown children who said from the time her kids began receiving allowances, they were required to save some and give away some as well as spending it. The child could choose his own charity, and it could even be an activity he was associated with, but the expectation was built in. Ditto for savings. Another woman encouraged her son to save by matching 2 to 1 every dollar he put in his bank account.

On shopping: A huge source of conflict. Many of these kids are being raised in situations of mass affluence - everyone around them is rich, many are spoiled, and the desire to keep up with the Joneses (or the Jasons and Tiffanys) can be intense. And since many of the women at the conference have hugely demanding occupations, the temptation to give in and buy a little peace and quiet is strong.

One great solution, once a child reaches a degree of financial literacy: Set a limit and let the kid make the choice. For example, one woman loads up a debit card twice a year for her teenaged daughter's clothing needs (i.e., for warm and cold-weather seasons). The sum is $1,500, which is generous; but once that figure is consumed, that's all, folks. Her daughter can blow $1,000 on Manolo Blahniks, but then has to skimp somewhere else. Result - a more thoughtful, "empowered" consumer (to use a conference buzzword).

On fiscal responsibility: My impression was that few of these women's children worked, whether at things like babysitting or lawn-mowing, or at more formal occupations like waitressing or schlepping burgers. And in fact, statistics show that there has been a decline of teenagers in the workforce. I suspect this is particularly true among aspirational types, who are busy building their resumes for the Ivy League (a revolting concept, but a very real one, alas...).

So how do you teach kids who never have to earn money how to value it? One interesting idea - have the child plan a significant family purchase, such as a vacation or a new car. Obviously, you need to offer a framework, but it certainly can get a kid thinking about comparison shopping, price for value, even negotiating and finding consensus (if other family members are involved).

On bailing out: Don't do it. If you want your child to be profligate and insufferable, was the consensus, the way to do it is to pick up check after check, time after time, with no accountability. One strategy for kids in college was to agree upfront what to pay for (e.g., if she is living off campus, rent and utilities; car costs, etc), plus a certain sum for spending money. And when that runs out, don't top it up.

I met another woman over dinner who brought this up, in relation to a nephew she was helping to support. He was running low on money, and his mom called to see if she would help out. Her response: I'm not a cash register. Tell him to get a job. Tough financial love is best applied early, because it gets real expensive later.

The love of money is not the root of all evil - those other deadly sins matter, too. But children who love money too much are surely the root of many unhappy families. The bottom line: In most cases, brats are made, not born. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.