Back to Class: Your Kids and Your Money

It's time for kids to go back to school, and it won't be long before our children start reaching for our wallets to keep up with their friends' spending habits.
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It's time for kids to go back to school, and it won't be long before our children start reaching for our wallets to keep up with their friends' spending habits. As parents, we need to figure out when to say 'yes' and when to say 'no.'

As a financial planner, I have seen clients wrestle with this conundrum for years. Nothing brightens up a dreary day like seeing our children smile when we say 'yes'. On the flip side, nobody wants their children to grow up with a sense of entitlement that turns them into spoiled brats. Look no further than the website Rich Kids of Instagram to see examples of kids whose parents can't say 'no'.

How do we find a balance between 'yes' and 'no'?

Each of us has a different definition of a great parent. The key to becoming that person is to get in touch with our own wisdom. If we use this wisdom every time our children plead with us for something, we are likely to come up with the best answer.

I have used my own parenting wisdom countless times over the years. I have two children who are now entering adulthood. As they grew up, I always kept three things in mind when I made choices involving them:

  1. You can never tell your children too often how much you love them.
  2. Always choose to be your child's parent rather than their friend. Children sometimes get upset and angry at their parents. That is okay. They will get over it.
  3. The goal of raising children is to have them mature into economically self-sufficient and emotionally healthy adults.
Let me give you an example. My son went to an affluent high school. Some of his peers had the "magic credit card" -- the one with no spending limit that gets paid off by someone else every month. At times, this put my son in a difficult situation. His friends had the money to go out to lunch every day or grab an expensive dinner on the weekends. Since he was responsible for his own spending money, he didn't have the cash to keep up with his friends.

During his junior year, my son asked me for one of those "magic credit cards." My heart told me to make his life easier and give him the additional spending money, but I took off my friend hat and put on my parent hat, remembering that my goal was for him to mature into an economically self-sufficient and emotionally healthy adult -- not someone dependent on my financial assistance.

I took the hard path. I told my son that I loved him, but in the real world "magic credit cards" don't exist. Like all of us, he needed to learn that he couldn't buy everything he wanted. He needed to figure out what was most important to him and spend his money accordingly. Of course, being a capitalist, I also reminded him he had another alternative. He could figure out how to earn some additional spending money by getting a job or starting his own little entrepreneurial venture.

In the end, my son got over it. Yes, he was upset with me at the time, but I believe he is a better person for it. Learning to say 'no' to our kids can be a challenge, but in many cases saying 'no' in the present is saying 'yes' to the future.

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