Kids need to know the value of a dollar
With holiday shopping in full swing, parents are getting on-the-fly — and often pie-in-the-sky — wish lists from their kids. Whatever the hot items are this season, they’ll fly off the shelves and be resold for an astronomical price as parents scramble to fulfil those wishes.
Last year, my eight-year-old daughter didn’t get swept up in the Hatchimals craze, but her list included some items beyond the family budget. So what’s the best way to tell children you can’t afford something?
“Talking money values can be hard — no matter your kids’ ages or the size of your bank account. But starting early is ideal,” said Beth Kobliner, financial literacy advocate and author.
Kobliner also said the key, regardless of your financial situation, is to be honest.
“If you’re like most families on a budget, and your kid wants to know why you aren’t taking a fabulous weekend beach getaway over school vacation like his friend’s family, it’s fine to say, ‘That does sound fun. But right now, that kind of trip isn’t a priority for us. It’s just too expensive, given all the other things we have in our budget. But we did buy that ping-pong table last year, so we’re going to have a ping-pong tournament with your friends,’” she said.
I’ve never told my daughter when I don’t have the money for something (which was often during my seven years as a single parent). In hindsight, I realize that was less about sparing her feelings than about protecting my own pride. But I also didn’t want to spoil her by giving her too much.
It turns out, fear of children having a sense of entitlement is common for parents of all income classes.
Kobliner has talked to parents who are well-off now but grew up with little money. The conversations in these families can be framed as, “We can afford it, we just choose not to buy it.”
Try to steer clear of going on and on about the way things were when you were a kid. Those comments will only create negativity, and you’re likely to get an eye roll from your child. Instead, put it into real terms. Explain how quickly the child outgrows clothes and shoes and how that makes it impractical to drop $200 on designer kicks.
Kobliner also recommends telling them how much other stuff that $200 could buy (a pair of shoes, three pairs of jeans and four tops, etc.).
Money is a tough subject for me because I don’t want my daughter to put too much emphasis on it. I prefer experiences over stuff. However, a friend and fellow writer offered a perspective that made me reconsider my choice to not really discuss it.
“I am straight-up honest about money with my kids because I want to prevent them from living paycheque to paycheque like we do,” said Sarah Cottrell, who recently wrote an article about how to budget for organic food. “At seven and four, they can tell you what a unit price is and why a savings account is better than a chequing account.”
Research out of the University of Wisconsin shows that, by age three, kids understand concepts such as value and exchange, and a report from the University of Cambridge found that many money-management habits are set by age seven. Once they get to middle school, kids start to be more perceptive — and skeptical — about advertising and marketing.