A Psychotherapist Looks at Incentive Trusts

Gallo, Eileen
December 2004
Journal of Financial Planning;Dec2004, Vol. 17 Issue 12, p26
Academic Journal
This article examines the use of incentive trusts to motivate children to engage in responsible behavior. When parents use money to motivate their children, they are creating external motivation rather than relying on their own enthusiasms and passions. As psychologist Ed Hallowell points out in The Childhood Roots of Adult Happiness, it is best for children's motivation to come from the inside and not to be supplied from the outside. Using money as a motivator simply makes people want even more. Social psychologists call this the hedonic treadmill. The hedonic treadmill ensures that very few people can be very happy for very long if what motivates them is getting more. Material aspirations change over the life cycle roughly in proportion to income. Money and material goods are external but happiness is internal. Helping children learn to work for a passionate sense of accomplishment more than for money keeps kids off the hedonic treadmill. If the client is a successful entrepreneur, way too often an incentive trust will de designed to motivate the child to follow in his or her parents' footsteps. Instead of asking clients to identify the goals they want their children to accomplish, ask them to think about what would be in the best interests of their children.


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