Children begin to make observations about money from an early age. If you are a parent you will definitely have been asked these questions by your child at some point in your life: Are we rich? Are we poor? How much do you make? Why can’t I have this toy if you have the money? Why can’t we have a new car? or why can’t we go to Disneyland Paris?

A lot of parents hesitate in answering these kinds of questions. “There’s this concern that too much money talk would lead to money-grubbing children or kids who want too much or focus too much on it,” says Ron Lieber, New York Times money columnist and author.

The worst word for parents to describe their children is “spoiled” after all “spoiled” describes parental actions and a big failure in the parent’s education methods.

So what happens when at the age of 15 your child becomes a self-proclaimed brat? Is it too late? What are the lessons to learn?

Overindulgence is a form of child abuse

Just when you thought you have seen it all. A few weeks ago Dr. Phil’s TV show presented the case of Nicolette Gray, a self-proclaimed Beverly Hills brat, who desperately argues that the $4000 cut to the monthly allowance her mother is giving her is unfair.

“She is forcing me to live like a peasant” Nicolette Gray said to Dr. Phil. She then adds “I want my mom to understand that I can’t live off $1,000 a month, and I grew up on a certain lifestyle. She can’t just take that away from me immediately”.

Dr. Phil explains to Nina that overindulgence is a form of child abuse, and it cripples a child. Children form their self-image and self-worth by making attributions to themselves. By watching themselves in situations and realizing “wow I did that” “I overcame that” “I accomplished that” and it gives them confidence that they can do these things.

Lesson 1

We quickly realize here that teaching kids the basics of personal finance is not just about helping them become money smart, but boosts their self-confidence, and makes them independent individuals. It’s also important to explain to kids where money comes from and the importance of work in the cycle of money.

Teaching kids about credit cards

Before her appearance on the talk show, Nicolette told the cameras that her mother raised her with everything she ever wanted, including ‘amazing schools’, a driver, a nanny, and personal trainers.

‘It’s the only life I’ve ever known,’ she said.

Nina admitted that she gave her daughter credit cards without any credit limit at a ‘very young age,’ and some months the bills would be up to $10,000 — despite her already having a $5,000 allowance.

Lesson 2

Getting your kid started on their financial journey with a credit card is usually a good thing. Done correctly, giving your teenager a credit card will help them learn how to manage credit correctly; and it can help them build good credit for the future. Additionally, it will also teach them good money management skills that will serve them well in adult life. However, it is important that you teach them the basics of using a credit card before applying for one. Help your teen to understand the importance of managing credit, how interest rates works, what credit scores are, etc.

Saying no to your child

After realizing that her daughter has turned into a ‘monster,’ Nina tried scaling back her allowance, but Nicolette refused to accept her new budget without a fight.

‘I feel like a peasant. I can’t live like this anymore,’ she said. ‘I’m always out of money. If you ask me, I think my mom should be giving me at least $2,500 a month just to cover my basic expenses.’

Not only does Nicolette want her allowance raised, she also expects her mom to buy her a $231,000 Mercedes-Benz G-Wagon in ‘matte black’ for her 16th birthday.

Nicolette told Dr. Phil that her mom is willing to get her a Mercedes-Benz C-Class, which she will accept, but she really wants her G-Wagon.

Lesson 3

“Don’t be afraid to say ‘no’ to your children. You set the rules and help your children learn the difference between wants and needs. Time spent explaining is always a good investment” – It Doesn’t Grow On Trees, Financial literacy book for kids and parents

Although Dr. Phil clearly explained to Nina, that re-parenting – by pushing her to get a job and saying no to her for the $5000 allowance and the new car – is the solution, a few days later Nicolette Gray posted a video on Instagram declaring that she finally convinced her mother to give her back the monthly allowance.