I remember them so vividly – a gorgeous pair of pink Nike running shoes. I wanted them so badly! They were my ticket to coolness, to being like the other girls. But my parents, working their way up from middle class into upper middle class, had different priorities. They said “no” to the brand name shoes and got me a cheap imitation instead.
Kids Are Expensive
It’s a well known fact that kids are expensive. Just type “cost of raising a child” into the Google search box and you will find that if you are a dual-parent family with a high income that lives in a city or a suburb along one of the U.S. coasts, you will spend about $250,000 per child from the day they are born and until they reach the age of 18. That’s before you pay, or help them pay, for college!
Discretionary Spending on Kids
It’s interesting that the various calculators are taking into account the household’s income and whether it is a single parent or a dual parent family. It means that whatever you spend on raising your child is in large part discretionary and depends on your abilities and on your circumstances. So we all try to give them their basic needs, but whether it will be $100,000 per child or $250,000 per child depends on where you live and on how much you can afford. The more you can afford, the more you will spend. I am also guessing that the more people around you spend, the more you will spend.
Raising Kids In A Materialistic Society
We live in a wealthy suburb of San Francisco. People here have a lot of money. They spend a lot on themselves and on their kids. Kids here walk around wearing designer clothes and bragging about their latest vacation. Many of them own iPods and cellphones. When we told our kids that we won’t be doing anything special for spring break this year, they were crushed. “But all our friends are going somewhere!” They protested. One of the first questions kids here ask each other on a first play date: “Is this a rental house or is it yours?” Seriously. Kids as young as 6 want to know if their friends’ parents can afford buying a house in the very expensive Bay Area.
It’s tough to raise kids in such a materialistic environment. The Silicon Valley is materialistic after all – sure, people come here to innovate and to live where exciting new things happen (Google, Facebook and others are practically our next-door neighbors) but what really drives it all is ambition. People come here to make money – tons of money – the kind of money that would enable them to live an extremely lavish lifestyle. Some of them actually make it happen, which continues to feed the frenzy. It’s like a never-ending, modern-day Gold Rush.
But it’s not just the Silicon Valley. America places a huge emphasis on entrepreneurship, on hard work, on the freedom to innovate and build and create and market your product. With relatively low taxes and (at least until now) minimal government involvement, The United States has always been a heaven for innovators, inventors and savvy businesspeople, and this has been part of its strength and amazing growth. But money is not, cannot be the only value, and this is something that grownups and children alike must realize.
Limits are Important
It’s very difficult to say “no” to your child when they ask you for something that they don’t really need, but want. This is especially true if you, as a child, were denied a lot of what you wanted because it was important for your parents to save or because your parents didn’t have enough money to indulge you. But saying “no” is very important. Children need not cost us more than they already do, and we shouldn’t indulge them to the point of corrupting them.
For my husband and I, the most pressing issues are teaching our kids the value of money, and teaching them to give back. We accomplish this by giving them a monthly allowance as well as several ways to earn money by doing extra work around the house. When they have a special request, we ask that they split the price of the product with us. This is extremely important, because in many cases, when they know that some of the money would come from their own pockets, they decide that they don’t really need that item after all.
In addition, this arrangement teaches kids the value of money and of budgeting. If they have managed to save $100 and the item they want costs $150, they would need to shell out $75 (their part) which puts things in context and helps them see how expensive things are.
We also help our kids pick a charity that they contribute to once a year, and teach them about choosing a financially responsible charity.
Learning to say “no” to your kids is not easy, but it is necessary. I feel that my husband and I have found a way to do so without depriving them of the things they want. At the same time, we managed to teach them important lessons such as the value of money and of hard work, the value of saving towards a goal, and the value of giving back to the community.
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Excellent subject. A lot of really good suggestions, especially telling children they’ll have to put up half (or some %) of the cost of something. I believe this is an excellent strategy for all the reasons already mentioned (the child values the object more, takes better care of it, may decide that finally it’s not that important to even get it after all, etc.)
I’ve always felt like my parents had no trouble at all saying no to me and my two older siblings! 😉 And their answer to “Why??” was always the same – “We can’t afford it.”
Many people take this to mean only “We don’t have enough money to buy that.” But I think there are other meanings as well. “We can’t afford to buy more trash that’s not worth the money you pay for it.” “The planet can’t afford more resources being used on worthless stuff which will just add to the rubbish problem.” “It may be cheap for us to buy, but that’s only because other people have already paid (modern day slavery, child labor, etc.”) And last and perhaps most important, “We have other priorities for the money we have.”
I credit this upbringing (and my husband’s, as well) to the fact that in our 40’s (and I know this isn’t especially fantastic, but it’s rare enough among the people we know) we own our flat outright, have a year’s worth of income in savings, several years’ worth in investments and retirement funds, and are able to take “the trip of a lifetime” holidays abroad every year (an extremely high priority for us!), entirely debt-free, despite the fact that compared to other people in both of our families, our income is pitiful.
Parents, please feel free to say “We can’t afford that,” even when you do have enough money to buy it. It is all too easy to see our children and other children around us become greedy little materialists, and there are already way more than enough of those in the world.
A type of this attitude was brought home to me recently by a friend. We just came back from a trip to India, where I’d fallen in love with a beautiful woven carpet, but in the end had not bought it. My husband had told me that it was entirely up to me whether or not we got the carpet, we could certainly “afford” it, and I was very attracted to it. I wanted it badly! The salesman did a super job of putting the pressure on.
So my friend was like, “Why didn’t you get it??” She appeared to think that since my husband had given the ok, I should’ve gone ahead and got it, basically automatically. Made me feel a little like a child who must need permission for such things… My reasons for not getting it were numerous, and although I think about it still (we got back from the trip over a month ago), I have no regrets about not getting it. And I didn’t at all like the idea that I should buy just whatever based on my husband’s “permission” (but that’s a whole nother story).
I will say, though, that we do have one little trick that I personally find very useful. We often take pictures of things that attract us but that we don’t buy, and we also take pictures of things that we want to give away/donate/regift/etc but may not feel like we’re QUITE ready to let go of yet. Many times that’s just the last step to take, and then we feel we’re ready to let go of it. Just having the photograph and being able to look at the picture of the item appears to serve the purpose, and it’s much cheaper and takes up much less space!
I live in South Africa where the disparity between wealthy and poor is huge and where even very average income (according to developed world standards) homes are seen as wealth beyond imagining for many, and it creates an interesting dynamic. To NOT give charitably is – in my mind – unthinkable and my older kids (8 and nearly 5) are very clear that having a nice home and plenty of good food / some extra murals and so on makes them far luckier than many, and when they whine that they’re bored, I ask them very seriously if they are bored of their (many) toys and things, we can give some of them away to less fortunate children… this generally gets them to go quiet and re-ignites their interest in their stuff! But it’s serious, I don’t just say stuff like that. We do, from time to time, go through clothes and toys and decide what we can give away and then they come with me to the charity I donate to and we actually see what happens next. My husband and I adore our kids and probably do over-spend / indulge from time to time, and that’s fine. We’ve worked hard and been so fortunate to have what we do and we want our children to have ”everything” as most parents do… but there’s a clear line and when you cross it, gratitude and wanting to take care of valuable stuff / valuing money gets to be a problem. So often, the more you give, the more they want and the less grateful they are, I’ve seen so many examples of kids who literally have no inkling that they cannot have precisely what they want, when they want it, regardless of cost. What happens when they grow up?
I was from a working class family in a wealthy area and I was tortured for not having the right clothes and I had no friends at all. I couldn’t say no to my kids if they need things to fit in to their peer group. However I would let my kids know how absolutely stupid the whole thing is and those Nikes were made in China by slaves and are of low quality and a complete waste of money and their peer group is a bunch of morons that we are catering to, even though they are low quality people..as all teens from affluent families are.
Very positive posting! I also very much like and agree in what you say Kate: their peer group are a bunch of morons and are low quality people.. as all teens from affluent families are. Oh how this is so true in many ways. Well said Kate!
Wow I can’t believe that kids are actually discussing whose parents rent or own their houses. What happened to the carefree days? It is important to teach your children about money but also not to compare themselves to others (easier said then done.). I think saying no is also important, they have to realize that they can’t have everything and if they want something they have to work for it.
Saying no teaches money values as well.
It is difficult, raising kids is a challenge. When I was 6 or 7 my parents had this ‘points system’. If my brother or I wanted something, we would have to “earn” it by doing chores and helping out around the house. Whenever we did a chore, it was awarded a certain amount of points and once we reached the targeted amount of points we were allowed to buy what we had our heart set on. This actually worked out quite well because earning the total amount of needed points took some time, which meant that if we wanted it, we REALLY wanted it, it wasn’t just an impulse desire from seeing something in a store.
I remember another family had so much stuff in their house, whenever we went over we were excited to play with new things, but the kids who owned it all were so bored of it, toys were so quickly neglected and tossed everywhere, it was like a sea of plastic. My parents also made sure that anything we no longer wanted was donated.
I heard a great quote, “Material luxuries are best enjoyed in small doses.” So true.
I also experienced that “renting vs. owning” kid stuff myself but a harsher version. I was visiting a favorite cousin of mine after being away for 5 years. I was amazed to know she’s now the owner of 4 fast food chains. She left me for a while at the living room with her 3-year old daughter watching TV. The kiddo was so snobbish. I just ignored her coz hey, I’m her aunt. She then approached me and asked “Are you wealthy?” then added “Coz you know I am.”Oh my, I was so shocked.
I was 18 back then. Now with my own kid, I understood why my niece acted that way. Kids really have a clear view of things around them. My own 3-year old already knows what shirt is better to wear. Anyway, that’s so much for these tips. Like Cath, I also treat my kid that way. I work hard and give him whatever he likes. I know it’s not too late to learn to say no.
Good topic. We just spent over 200 dollars on my 9 yr old’s birthday….I never had anything close to that at his age…..I’m concerned that we’re setting unhealthy patterns. We need to have more talks with him about money and start some chores for him. Money and kids is a big issue.
Limits are so important. They are critical. They are your insurance policy for having well-adjusted kids, in my opinion. My parents were upper middle class and I never wanted for things but I also knew the value of work and I certainly never got something just because I asked for it. I didn’t have most things that my friends had. I think that kind of discipline leads to kids who appreciate the things they already have instead of wanting more.
I completely agree, kids are expensive, even before they are born.
One trick I learnt to save money on them was to reduce the portion sizes of our families meals, this way there is generally no food wasted at the end of each meal. If the kids want seconds, they can always go back for more, which is more than fine.
This is a habit you can teach your children from a young age and in turn you will save food and money.
I love this article. I try my best to mitigate the materialism that bombards my nieces (which sometimes even involves going against some of their own partents’ values.). I try to show them the ricness in sharing art, culture, music, and face-to-face stories as opposed to the packaged and unoriginal tripe that they are constantly subjected to on the tv, that encourages buying to fill that bottomless materialism pit. Hopefully some of my influence will take hold.
I love your idea about the charity. Really teaches them how lucky they are and puts their own needs into perspective. Thanks for that idea. I will add it to my arsenal and continue to fight the good fight.
Amazing story about rental vs. buying a home. Anyway, on topic, the concept of having the kids help budget their personal expenses regardless of the formula that is used really does work well. My parents expected us to put half our money in a savings account to use for big ticket items such as summer camp expenses. And I settled on sending my daughter out to buy her own clothes (or encouraging aunties to take her shopping as their birthday gift) because I was annoyed with standing around in the waiting room.
Great post and yes teaching them constraint at an early age will actually do them a lot of good in the future.
Wanted to say that I have no kids but I’m pretty sure that I would keep them well grounded like my family did me an my sister. I consider myself to be very much like them in personally and moral.
I like the idea of helping your kids pick a charity to donate to each year. That’s fantastic, and a way for them to realize that while money is certainly important, and you need to take care of yourself, people are ultimately more important. Generosity is an excellent habit for kids to learn.
The topic of money and kids is one that really resonates with me. I think that like many other habits, good money management habits can be learned when young, and parents play the most important role in shaping these habit.
Excellent post.
This might be easier said than done but all parents should implement this practice into their lives. I hate seeing children that are spoiled and bratty. Teaching your children restraint will do nothing but help them later on in life.
Nice article. As a second generation silicon valley Dad of 5, I can really relate to the commentary, and I like your techniques. For our teenage kids, we’ve also worked out loans for big ticket items like iPods and laptops. When it takes them 1-2 years to pay off an item each week by diverting a significant percentage of their allowance they (a) appreciate the expense of the item more, and (b) take much better care of it. We also have them create and manage their own clothing budgets – its a nice well defined area of spending to use as a teaching tool. I ended up building an online “Virtual Family Bank” to make tracking it all painless for the parents and to give the kids some practice with “online banking”. If interested, you can see it at FamZoo.com.
Cheers,
Bill
This concept is popularly called ‘pester power’. It is very important to learn to say no to your kids. Kids compel their parents to buy a product and many companies encash on this concept.
I’d did an article for Cosmo where I talked about the idea of a “total allowance” for kids. Basically giving the child all the money required to do everything: Buy clothes, uniforms, travel too and from school, music lessons, holidays, everything. If they run out of money they run out of money. If they don’t have money for a sweater and have to wear a ratty old one, that’s their problem.
My parents were not as well off as many other people, so I grew up with them saying no to quite a few things. I think by the way they raised me I was able to cope without having all the gizmos and gadgets that all my friends had.
Not only do you learn to accept that you can’t have everything, but when kids grow older they will learn to be frugal themselves. I know I’m able to have a little more self control than my friends who are only children, or who have had a lot in their childhood. I’m very happy with how my parents raised me because it taught me so much more than I could have imagined.
“My mom had a special deal, I could spend my allowance on anything I wanted, but she would match me up to $40/month if I spent it on clothes. Sort of a 401(k) employer matching for teenagers.”
I love the concept of matching on worthwhile purchases. I’m going to find a way to use it with my kids.
I love the match idea too. I must try to remember this, but I think I would do it for savings instead, since I don’t believe it’s up to me to determine what is actually “more worthwhile”.
Your kids will be much happier if they learn to be frugal with money. If you keep your core values in the forefront, and teach them to your children, they’ll come to value those before money and overly material things. I’m not talking about austerity… I’m talking about true value.
And it seems to work. I have a 19-year old daughter who’s in a profession where she already makes a lot of money. However, while many of her friends seem to spend every dime they make, she is a very smart shopper. So far she owns her own place, and has saved a ton of money for her future. She’s also a very caring person who gives generously of her time, and who’d give you the shirt off her back if you needed it.
I’m not saying these things to brag (though I love my daughter very much, and I’m a proud dad :o), but to say that it is very possible to raise a non-materialistic person in a very material world.
Marc
I’m sure everyone can tell you are a proud dad but with good reason. I have a lot of learn from you it seems and I just hope to be able to raise my daughter in the greatest way possible.
David, you’re clearly a smart guy. And by the fact that you’re concerned, and thinking about this, I bet you’ll do just fine. Understanding the problem gets you 90% of the way to the solution.
I remember we used to give my daughter $50/month(when she was in her teens) to spend on whatever she wanted. But, when it was gone, it was gone. Period, and don’t even bother begging. She learned the value on money. She learned that if you spend it all on junk, it’s gone. But if you save it, you can get something great… like a house or a condo… or money in the bank… or both.
I wish I’d been as smart at her age.
Marc, no worries. You are smart with your money now. That’s all that matters.
Thanks again for the tip on instilling the fact that money doesn’t regenerate by itself. I will have to remember all these great tips though since my daughter is only 3 months old.
Hi Vered – I am also shocked that kids ask about renting v owning. Luckily our city is quite small, so my kids don’t ask for designer brands as the shops don’t have them. But my daughter can be quite wasteful when it comes to clothes – buying things and not wearing them, so I think I’ll try out your tip.
I guess it is partly my fault. When they were younger and I was working a lot of hours, particularly when I was a single parent, I tried to get over the guilt by telling them that working a lot of hours meant I was making lots of money to buy them nice things and go on great vacations. Looking back, it was a bad move.
Wow, that is unbelievable that kids ask about renting vs. owning. I’m just floored.
I think your approach with the allowance is the absolute perfect solution. My parents gave me an allowance that was a bit more than my friends got. But it was also to include the purchase of clothes — they didn’t take me out for new school clothes, etc. My mom had a special deal, I could spend my allowance on anything I wanted, but she would match me up to $40/month if I spent it on clothes. Sort of a 401(k) employer matching for teenagers.
Anyway, I attribute my money skills in part to the approach they took with me, I always took my purchases very seriously. Who knows, maybe those lessons laid the groundwork for my eventual retirement at 44.
Kids have become more materialistic than ever, but I blame the media and popular culture more than I blame the parents. Kids are bombarded with imagery glorifying wealth and money that they believe that wealth, above anything else, should be the be all end all goal.
There are also so many ways that kids can feel peer pressure now, with social media sites like facebook. If a kid goes without the latest “cool” toy, they’re not just teased at school, they hear about it online.
It is so so hard to raise kids now… I think that more and more people are having less kids if any at all because it simply costs too much to raise them in our society. Your story about the luxurious life in the Silicon Valley just goes to show that younger kids are now starting to care more than ever about wealth and status. And who else did they learn that from? None other than their own extravagant parents.
You are doing a great job of making your children aware of their financial responsibility in your household. Great job on teaching your children the true value of money.
I had to say no to my little Sara already. I’m still at the stage where it’s not monetary (we are just trying to keep her from shoving her fist into her mouth into her mouth) but we are getting there.
I’m sure that reasonableness will help a great deal. Many parents just say no without any explanation other than “because I said so” which just reflects the fact that they are lazy.
I remember when my kids were younger (I have four, ranging from 6-11) thinking that exact same thing: I would never say “because I said so” and would simply explain my reasons for saying “no.”
I still strive for that goal, but I’ve found that the kids aren’t always persuaded by my crystal clear logic. This applies not just to spending money but also more mundane things like going bed before midnight, eating 17 desserts, getting in the car for school when they just want finish one more game, etc.
Reasoning works well sometimes, but reasonableness is in the eye of the beholder, and my kids are only too happy to debate forever. So sometimes, I have to admit, I fall back on the dreaded “because I said so,” and think a bit wistfully about my old idealism.
Good luck to you as little Sara grows up – if you can stick to it, you’ll be my hero.
Saying no is important. We often say no to our son. He gets an allowance, and, after setting aside money for our church, and for saving, he can spend the money. But there are some things — what 7-year-old really needs his own netbook? — that we tell him he has to wait for, no matter how much allowance he saves up.
In the end, though, our main focus is on teaching him that he needs to make better decisions with his money. He made some poor purchase decisions early on, and his dissatisfaction has already made him a more discerning shopper. And, of course, he is already learning that he can’t always rely on mom and dad (or someone else) for what he wants. Sometimes he has to do what it takes to go out and get it.