Remember that saying “Do as I say and not as I do?” In my opinion, it rarely works well with regular life habits, much less financial knowledge. Children, especially teens, watch closely the habits of their parents when it comes to money, and often follow in their footsteps. Aside from using your credit cards too much and not saving enough, another “not so good lesson” we parents often teach our children, is that they do not have to work too hard, if at all, to buy an expensive item. Example: Pre-teen wants a certain kind of running shoe that is $120.00. If you have a pre-teen, you know they type of shoe I am referring to and you also know $120.00 is a low price. However, your child comes home claiming everyone has these shoes (from my real life experience, this is not far off the truth). In fact, my 6th grader actually handed me the phone the other day to hear firsthand from one of her friends relay that her parents had just purchased her these shoes.
Now, reason kicked in and I assured myself that this purchase must have been a birthday gift or these parents must have had the pre-teen work for 2 months and trade her chore money. No, no such situation. These parents just bought them for no reason at all. Hence, this article. If all of these parents have no problem buying $120.00 shoes, they must be very well off (among the 2% in our nation earning top dollar) so they have no money concerns, have inherited significant sums of money (lucky ducks), decided to skip eating out for a month in order to save enough to pay for these shoes, or like many Americans just had to have (or in this case, let their child have) what they wanted when they wanted it and “charged the item.” I am concerned that many parents fall into this latter situation.
This article is not meant to berate any parent who has spent lavishly occasionally on their child – after all, they are cute, make good grades, do their chores, etc. so it is hard to turn them down. And it is your money to spend as you please, so who am I to tell you how to spend it? You are right. I won’t try to tell you what you can and can’t do but I will ask that you “think twice.” If it is an occasional purchase and if the child really understands the expense of the item, I can understand a parents reasoning. However, I have meant many a spoiled teen who does not have any comprehension of how hard it is to earn $100.00 and I have talked with more than several dozen who have let their spending get out of control. It is estimated that the average teen spends around $4,000.00 per year (1/2 the money comes from FT or PT jobs and the other ½ from parents). That’s almost $400.00 per month. Imagine just ½ of that going into investments instead? If the teen were provided some knowledge and discipline, he or she could accumulate upwards of $10,000.00 to use for college instead of 20 pairs of cool shoes, a dozen pair of in-style torn jeans, 500 cups of gourmet coffee, etc.
Unfortunately, parents are the ones with the initial accountability. School is hard pressed to teach the basics, much less money management. Think of it this way: if you start teaching them early enough, maybe by the time they get through college, they will be able to be well on their way to financial independence and not be among some projected 40% of children in their early 20’s that come home to get support. I know it is a hard lesson to learn and it takes some time but imagine if you had known all about personal finance when you were 15, how much better off financially would you be today? Or if you did get taught and are financially healthy, then, what better lesson to start teaching your children now – it is never too early (remember the rules of compounding).
So, the next time your pre-teen or teenager asks for an expensive item, try one of the following responses (my husband and I use them all the time):
I would be happy to help you search online for a reasonable price and if we find something that you can afford, you can buy it.
Give it a few months till the price comes down and by then, you may have earned enough allowance to buy it.
That’s very expensive. Do you know how many hours the average American has to work to pay for that? If you want to earn it over the next 6 months by working extra chores, I will help you make sure to find the best value for your money but realize everything else you are forfeiting.
Do you know that if you took that money instead and invested it in XYZ investment, you can buy the item you want with the interest you earned? What do you think? (Note: If the investment doesn’t do well, you can help the child buy the item as the lesson learned).
So, just think about it. These lessons can’t be learned without your early intervention! |
