Spending on Your Children

Are you really doing them a favor?

Even some of the most dedicated hard-core savers have a problem when it comes to spending too much on their children.  Let’s face it:  we all have a soft spot for our children.  Most parents want their children to have all the things they never had growing up.  This is natural and is something parents of all income levels want to do for their children.  The problem with this kind of thinking is that your overspending is not only doing a disservice to yourself from a financial perspective but you’re also not teaching your child the value of a dollar.

Spending on ChildrenAs a parent, you get a special feeling when you see your child’s eyes light up when they get their favorite toy.  This is one of the great joys of being a parent and is something I would never want to deprive you of.  But no matter how badly you want to spoil your children, you have to instill financial discipline.  Spending $1,000 on your child for Christmas when you can only afford $500 is only going to hurt your financial future, especially if you’re using credit cards to pay for the difference.  This happens much too often since parents don’t want their children to feel deprived.  You’d probably be surprised at your child’s response if you just sat down with them and had an honest conversation about what you can afford to buy for Christmas, birthday, or back-to-school shopping.  Just remember that although your child may want the world, the one gift that matters most to them is your love, patience, and time, which is something money just can’t buy.

Besides the financial implications overspending on your children will have on your wallet, there are also the unintended consequences this approach will have on their future.  To explain, when your children are living at home, this is the best time to teach them about money and budgeting.  Even if you tell your children that saving is important, your actions regarding your spending habits, on yourself and them, will overshadow your words.  Take this opportunity to lead by example and teach them about priorities so they understand they can’t have everything they want.  This is a very important lesson for your child, as the last thing you want when they go out on their own is to mismanage their own money and wind up in debt.  If they never understand the value of money because you bought everything they wanted, how do you expect them to make good decisions in the future regarding their own finances?

If you have a child over the age of 12, try giving them a budget to work with when it comes to back-to-school shopping or some other purchase where they have to manage a certain amount of money in order to get what they want.  This will teach them how to comparison shop and make decisions about what priorities must be set when choosing between an expensive pair of shoes, jeans, etc.  For example, let says you decide to give your child a budget of $400 for back-to-school shopping.  With this budget, they may decide that no matter what they want a pair of $100 jeans.  Although you may not agree with spending all that money on one pair of jeans, don’t judge.  Just remind them that spending $100 on one item only leaves $300 for shoes, tops, etc.  Once they realize you’re serious about this budget, they’ll quickly realize that they’ll need to stretch this budget to cover all their necessities.

At the end of the day, you can talk until you’re blue in the face about managing money with your children, but nothing will make your words hit home with them until they are directly impacted by their own monetary decisions.  Most importantly, this will give them real world experience on how to prioritize and work within a budget, which is something they will have to deal with sooner or later.

Ron Hawks

Ron is a personal finance author, advisor and speaker. For more information about Ron and his highly acclaimed current book Climbing The Financial Mountain:  Wealth Building Strategies for Every Stage in Life go to http://climbingthefinancialmountain.com where you’ll also find access to free financial tools and resources. 


11 thoughts on “Spending on Your Children

  1. Nancy J.

    My child actually showed me this blog and asked about getting her own budget. I think she likes the idea of getting a dollar amount that she can spend the way she wants. After reading the blog, I agreed to do this for my daughter as I think she will learn a lot from this process.

  2. L. Sapara

    I never thought of it in the context you explained in your blog when it comes to spending on my children. Thanks for the perspective.

  3. L. Fulk

    This really works. I’ve really enjoyed watching my teenage daughter spend within her budget and make some good decisions with the money. She said she really learned how to make the most of the money she had.

  4. K. Tadkert

    I’ve read your book and totally agree with the idea of giving a child a budget to manage. However, my wife seems to find creative ways around tapping my daughter’s budget. “oh it’s a gift” or “I bought it for myself and she’s borrowing it”. My big problem is getting buy in for our whole family. And as you mentioned in Chapter 5, it is crucial that all members of a family cooperate in the budget. I’m not giving up because as you said “this will give them real world experience”

  5. M. McCurdy

    Good Blog entry. Agree with your conclusions, and can tell you that we did achieve some success by putting kids on a budget – so when it was time for buying school clothes for fall, we told them what their budget was, and forced them to set priorities for spending. It actually worked out better than expected. Our kids learned about budgeting, and as they are relatively clueless as to difference to what $500 versus a $1,000 means when buying clothes, forcing them to live within say a $500 budget worked. Kind of expected them to bitch and moan about not getting a $1,000 budget, but never happened.

  6. Brian Talberts

    Teaching your kids about spending is never a bad idea. Of course, like the blog said, you need to lead by example or your kids will never listen to your words.

  7. Ken Summter

    After reading your blog, my wife and I decided to put our 15 year-old son on a budget. Although he wasn’t happy, I noticed right away that he became a little pickier about what he purchased and how much it cost. Thanks.

  8. Linda Millens

    I did this with my daughter about a month ago and was really pleased how much it changed her attitude about money. The first thing she said to me was that I never thought about the cost of things when you were buying it for me. This is a lesson/approach we can all learn from.

  9. J. Mudd

    It’s exhausting to find knowledgeable individuals on this topic, but you sound like you know what you’re talking about!

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