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Let Them be Frugal

During these difficult economic times we’re all thinking a little more carefully about how we spend our money.  A few years ago it seemed like resources were unlimited. We’d go out to dinner if we didn’t feel like cooking, buy the latest electronic gizmo for ourselves and our kids, and not think twice about cell phone minutes.  The way that companies sell things speaks to the kind of consumers we were. They ‘neglect’ to tell you about certain fees, charge things automatically unless you object, assume that we want super-size. It’s obvious that these tactics work for them, or they wouldn’t use them.

I can't believe how many young kids have expensive phones.

What are kids learning when we spend this way? Money is no big deal.  They can have pretty much anything they want when they want it. If they’re irresponsible and their belongings get lost or broken, they’ll just get another. These kids are going to be in for a rude awakening when they’re out on their own. In fact, the youngest generation of adults is already in trouble.  I know people in their 20’s who make really good money, but can’t seem to pay the rent. They have no idea how to save up a down payment for a house. Wouldn’t it be better to learn money management when we’re talking about a $100 iPod rather than a $4,000 credit card bill for stuff that you can’t even remember?

So how can you teach kids the value of money?  Well, lectures don’t work. No matter how many times you say that money doesn’t grow on trees, if they always get what they want when they want it, those are just words. So you deny them something they want?  That seems mean. Besides, kids are smart. They’ll figure out that you did that just to teach them a lesson.

moneytree1The answer is to put some of the power in their hands. Give them an allowance and let them live with it. The second part is the challenge. It’s all too easy to give them money and then still buy them things. Decide what things you’ll pay for and which expenses are theirs – and then stick with it. Maybe you pay for food, clothes, extracurricular activities. Maybe you pay for groceries to make lunches with and they pay if they want to buy lunch. Predictability is key. Just like we make decisions based on expected income, their decisions will be better if they know what’s coming. That’s not to say that you can expect them to make responsible decisions right away.  It takes a few mistakes to get it right. They need to see something they want and realize that if they hadn’t spent the last three weeks’ allowance on cheap toys, they would now have enough to get it.  They need to arrive at the register only to discover that they don’t have enough money to pay for the things they got.  Let them put it back. If you come up with the difference, the idea that money is finite is weakened.  Use cash.  It’s easy to see visually that when it’s gone, it’s gone.  (Not to mention the math learning involved.)

Be open to their ideas. We already have experience making decisions, so it’s all too easy to make our kids’ decisions for them. My son recently announced that he wanted to sell his Nintendo DS to buy skinny jeans.  Well, I know that he’ll never get close to what the Nintendo cost, he’ll wish later that he still had it, and the expensive skinny jeans will be forgotten before he outgrows them.  But I bit my tongue and let him do it.  He got an unexpected bonus – a lesson in sales resistance.  The sales person at the shop that purchased the DS did everything he possibly could – from offering discounts to appealing to Mom – to get my son to spend his DS money on other gaming gear from his shop. My son had to stand firm to get what he wanted.

babymoney1You may need to do something different for different kids. This is difficult because you want to treat them all equally, but each kid has different needs. My daughter and I struggled over buying clothes. She didn’t like my shopping rules. It seemed to me that she always wanted the most expensive items because they were the most expensive. And there was no such thing as “enough” clothes.  So we put her on a clothing budget. We made rules about how many pairs of shoes, long pants, etc. she must have, gave her a monthly budget, which rolls over to the next month if unspent, and turned her loose. Now she can splurge on that trendy label every now and again if she plans ahead. She watches for sales because she can get more for her money. And there are no more arguments between us about the price of something.  I just say, “Can you afford it?”

All you have to do is not rescue them.  Kids are smart and adaptable. They can take the facts and come to a good solution – sometimes a solution you wouldn’t have thought of.