Papa don't preach

While we may envy them, parents who are getting rich quick in the Celtic Tiger economy have their own problems. When you haven't grown up with wealth yourself, how do you rear children who can handle the privilege of having money without being spoiled by it?

Research conducted in the US has uncovered psychological problems amongst children whose parents have won lotteries or got rich quick via success in business. The problems stem directly from the impact of sudden wealth, according to Eileen Gallo, who presented her study to the American Psychological Association's 2001 conference.

How badly or how well a child is affected depends on how ethically parents handle money issues in the home. If they want to rear a happy child capable of healthy adult relationships and responsible behaviour around money, then parents must attend to the "money messages" they give, says Gallo.

Good messages are provided by parents who save their money and don't spend it, or who save it and spend it responsibly, discussing how and why with the children. In nine out of 10 cases, children who got these messages turned out to be psychologically healthy adults who handle money well.

When children don't receive these messages, they grow up to be chronically dissatisfied adults. Parents who spend, spend, spend, and expect to receive status and love in return, rear children who will never find adult happiness, Gallo found.

Giving children an allowance and letting them manage is not what's important, says Gallo. The crucial factor is that parents talk about the way they handle their own money and model responsible behaviour around money for their children. It's not enough to preach.