While most parents feel satisfied by providing their children with life’s necessities, many parents may feel guilty when they can’t give their children what the neighbors’ kids have. During these difficult economic times, many parents are re-evaluating their spending habits and trying to please their children with what they do have. For many children, distinguishing between a want and a need is tricky.
Here are ten tips to help you deal with cutbacks in your family:
1. Take this opportunity to reflect on and review your spending habits. A crisis can also create an opportunity for change and an opportunity to gradually teach your children about the value of money by modeling wise spending and careful budgeting. Even if you have lots of money to spend, consider what you are teaching your child by continually adding to their material wealth. Dr. Rosie J. Payton, Assistant Superintendent of Elementary Schools with Jackson Public Schools, sees firsthand how economic shifts affect children. “In order to help children cope with cutbacks and fragile financial times, parents should always have good quality discussions with their children, listen to their thoughts and give [the children] opportunities to find personal solutions.”
2. Keep in mind that children are easily frightened by sudden changes and can quickly jump to the worst conclusions. A young child, for example, may worry about not having a house to live in if they hear you talk about not being able to throw them the usual birthday party. The key is to cut back gradually and to not make an issue over not being able to afford something. Instead of having to talk about what you can no longer afford, consider how you can spend your money more wisely.
And remember that adult words may not make sense to children. “Parents should use age-appropriate language when discussing the financial issues with their children,” says Payton. “They can help them learn the terminology related to the American economic system by discussing words such as bailout, and credit.”
3. Help your child understand the difference between a need and a want. Do this at a quiet time when he or she will be more likely to listen—don’t wait until you are at the toy store. “The advertising industry spends millions of dollars marketing products to children under the age of 18,” says Sherry Rainey, Consumer Credit Counseling Service-Jackson. “Help your children realize the importance of making wise purchasing decisions by distinguishing between needs and wants. It is a practice that will serve them well when they are old enough to earn and spend their own money.”
4. Help older children understand the value of money. Have them contribute part of their allowance or wages from part time employment to items that are not necessities. “It can be helpful to conduct a reality check with your children on how many hours it would take working at a minimum wage job to buy a certain item they long for,” says Rainey.
5. Watch how you model buying habits. If you buy on impulse, it may be difficult for you to help your children reflect and wait a couple of weeks to see if it is still at the top of their must-have list. “Effective budgeting is the key to achieving financial success,” says Rainey. “If parents become disciplined in creating and managing a budget, then they can teach their children good habits that will hopefully stick.”
6. Don’t say “we can’t afford this anymore.” Children will again jump to terrifying conclusions about what will happen next. Say something like, “I’ve been thinking that since you already have so many games and toys at home, that buying more is just adding to the clutter. Let’s go through the cupboard, give away what you don’t need, and see if you really need another game like this. Maybe we’ll even find something similar to it stuck away at the back of the cupboard.”
7. Compromise. If your child insists that the item is really important to him or her, say something like, “I know that you really want it. I know what that feels like. Unfortunately buying that toy wasn’t on my shopping list for the week. Can you think about it? If you really want it as badly in a couple of weeks, we’ll think of a way to make it happen.” Plan on how to save the money to get it: “If you put aside your allowance over the next two weeks, that’ll mean that you’ll have half of what you need. I’ll put in the other half.”
8. Without alarming your children, gradually include them in some simple budgeting for the household. First decide as an adult what you feel comfortable allocating each week towards your household expenses. “Allow children to develop their own budget and devise a list of ways that they can help with cutbacks in the family,” suggests Payton.
Take that amount and present this as an exciting activity–your children won’t even realize that they are improving their math skills! Lay all bills (real or Monopoly money) out and then ask your children what they think you spend on the necessities. By showing your children how to budget and allocate, they may be more sensitive frivolous spending and you are teaching them an essential life skill. A word of caution: Make sure that your children are not at home or are asleep if you and your partner fight about money--it’s amazing what children hear even when you think they aren’t listening!
“When practicing budgeting lessons with your children, make sure you explain how credit works, especially credit cards and the accrual of interest on the money your borrow,” said Rainey. “When kids see their mom and dad use credit and/or debit cards to make purchases, they assume that there are no limits to the items they can buy. Parents should explain how deferred payments work, and the difference between using credit and debit cards. Parents should also teach their children the value of establishing a savings account to handle emergencies that may occur. Spending less than you earn is an important lesson parents should teach children early so they can develop healthy financial habits at a young age.
9. Always try to have some money left over for a slush fund. Treat yourselves to something fun at the end of the month, especially if you’ve been careful all month long.
10. Try to remain optimistic, even during tough times. Even if you can’t afford something right now, talk about how you can make it happen as a family. Ask, “How can we work together to make this happen?” And remember, keeping lines of communication open is important.
“It is a good idea to read current news related articles and discuss financial issues with children when it is heard on television,” says Payton. “Ask their thoughts on ways to resolve some of the financial situations that were read or heard.”
SARA DIMERMAN is the author of Am I a Normal Parent? And the founder of the Parent Education and Resource Centre in Thornhill, Ontario. She is a well known author and lecturer on parenting and family issues.
