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The Family and Your Spending: Children

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Donell EdwardsDonell Edwards, Blogger

About Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.




Know Your Money
Tuesday – March 25, 2014

SPECIAL Family  Spending Series
The Family and Your Spending:  Children
By Donell Edwards

We love our children and we should, but we must also teach our children to be responsible when it comes to managing money.  Children learn from the example of their parents, and if we mismanage money, if our children see us purchasing things we can’t afford and then see us struggle to try to pay for them, this contributes to the cycle of generations who do not manage money well.  So it is very important to teach our children to save, how to budget, and to set a good example for them.

One problem many parents have is trying to ensure that their children have everything that they did not have.  While there is nothing wrong in wanting to make sure that our children live comfortably, this should not result in our doing things that we cannot afford.  Obviously, if children need things for school and their education, for example if they are in the band, or if they are going on a field trip, or if they need supplies for special projects, or if there are health issues involved, we would want to take care of matters that are necessities.  The issue is spending frivolously on things that our children do not need and that we cannot afford.

For example, it is not money wise to spend several hundred dollars on expensive athletic shoes or the latest designer clothing, and we are struggling to pay the mortgage each month.  Furthermore, while the latest technology is fascinating and in some instances helpful or useful in an educational sense, it may be best to wait until we save enough money to make purchases of expensive computers, tablets, cell phones, or video game consoles.  The point is, don’t make purchases that you cannot afford, even if those purchases may benefit the child unless it is absolutely necessary.  Wait until those purchases can be made without creating a burden on the budget.

Sometimes children learn how to manipulate their parents, and they know how to approach parents about making purchases of things they want, and often times parents don’t realize what is happening until the deal is done.  Instead of allowing yourself to be manipulated by your child or children, set a good example yourself by carefully and regularly monitoring your spending, having a realistic budget, and living within the budget.  Talk with your children and explain to them how things work.  When my children were young they learned very quickly that you could use credit cards or write checks to make purchases.  When they wanted something they would say sometimes, “Well you can write a check.”  Of they might say, “You can use your credit card.”  I had to explain to them that there had to be enough money in the bank to write a check, that you can’t just write checks because you want something.  Also, I had to teach them about credit, that using a credit card created debt, and that purchases made with credit cards had to be paid for with money.

So make sure that you are setting a good example for your children with your own money management, and spend time with them teaching them about saving and wise spending, especially if they get an allowance.


Cheerful Young Woman with Shopping Bags


If your child is old enough to work before they start work sit down with them and let them know how you expect them to use their money.  Help them work out a budget.  Include in their budget a small amount that goes toward family expenses.  Explain to them that there is a cost of maintaining a household that includes food, utilities, rent or mortgage, insurance, etc.  Also include a reasonable amount for savings.  Help them open a savings account, or if you have the financial acumen, help them save enough to purchase stocks and learn about investing.  Of course, let them enjoy the fruits of their labor and leave a large enough amount for them to do some of the things they want with their money.  But even then, talk about their purchases and their purchasing habits with them regularly and help them identify any areas that may cause problems.

Children are wonderful, but they can manipulate purchases made by their parents and have a negative impact on family spending.  That is why parents have a major responsibility to teach children about the work-pay-save-spend-work cycle.  Help children understand that when they work all of the money they earn is not theirs, that they have responsibilities and these must be given priority.  Help them learn to save and to make a realistic budget and the importance of living within their budget.  Set a good example yourself.  Only when we teach our children responsible money management will we be able to overcome the cycle of generational poverty and workers who live from paycheck-to-paycheck.


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