Monday, August 9, 2010

Explaining Money Matters to Your Kids

It’s a fact: we’re living in challenging times. But while we are struggling with our personal financial budget deficit, we can learn from it too. As parents, our natural instincts tell us to try to deal with it alone, and not involve our family, but as we try to shield our kids from it, they can easily see through our façade, and see what’s happening, at least our frustration.

Nobody is immune to the hardships of raising a family, and the financial stress that has been more apparent the past few years.

So this week, I wanted to give some helpful hints on how to have a talk about money matters with our kids, and about my recent experience with regards to money and budgets and my son Austin.

Though it’s difficult at times, it’s also a good reason to begin the conversation with our kids, even if when they are young. Children between ages 3 & 4 may be too young to understand entire concepts, but they can grasp general concepts, like buying something with money.

This weekend I went shopping for back-to-school clothes with my 16-year-old son Austin. (Now I do admit that boys are much easier on the pocketbook and less costly than teenage girls, so I’m feeling a bit fortunate about that!) My shopping experience with him was insightful and positive, and I wanted to share it:

I gave Austin a budget for our shopping event, and that was all I could spend. I wanted him to try to make conscious decisions, and make sure each purchase was what he needed, not necessarily what he wanted. So before we went off to Kohl’s Saturday, I asked him, what did he need most? He told me pants, shorts and some socks, and a jacket. I knew right away the jacket would put us over budget because he likes expensive brands for jackets, and besides, we live in California, and don’t need a jacket right now. So with that said, he agreed to put off purchasing a jacket for winter until September sometime. I was amazed that we came $9 under budget! He got exactly what he wanted, felt good about it, and we didn’t over spend.

Funny, he wouldn’t show me his jeans and shorts when he was trying them on, just that they all “fit” and not until we got home, did he model ALL his clothes! So that’s a 16-year-old's way of saying, I love my clothes! He also said thank you as we left the store, and I could tell he was very pleased. So I was pleased that he stuck to the budget, didn’t give me a hard time about buying more clothes (the “I want” list) and was satisfied with what he got.

How are money-related decisions made?
A chorus of “But Mooooom, all my friends have it!” should make it obvious to you that children want things and they want them now. It’s the instant gratification generation, and all that marketing via TV, Web, etc… makes it even harder for them to understand “You Can’t Always Get What You Want” like that Rolling Stones' song! It’s best to explain to your kids the difference between wants and needs and let them know that right now, the money you have is only for necessities. This sounds easy, but it’s not. My kids have finally gotten to the age where they do understand it better, but getting them there took a lot of patience.

Is the family on a budget?
You need to make it clear that your financial situation differs from that of other families, and that they should not compare. They may see friends who always have the latest gadgets and gizmos, and wonder why they cannot have the same. Let them know that at this time, your family is on a budget and money must be spent wisely for things the family needs, not what the family wants.

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