Teaching Your Child How To Spend Their Money Wisely

Parents want their child to handle his own money responsibly.  They want him to plan ahead, spend wisely, and save for the future.  Most 10 to 13-year-olds, however, are less interested in being responsible than in buying what they want.  This causes a dilemma for many parents.  They know their child should make decisions and learn from his own mistakes, yet they want to keep him from wasting his money.  These conflicting aims make it hard for parents to be consistent.

Sometimes the child's point makes sense. "It's my money. Why can't I get what I like?" "If I'm saving up for a video game, why do you care if it's expensive?" Parents points are also sound. "You shouldn't spend your money on junk food." "Get two sweaters instead of one expensive one." "Don't throw your allowance away on something that won't last."

In general, it's best to let your child decide how to spend his own money. But if you feel his spending is out of control, set limits. At a time when you're both feeling calm, talk about money. Listen to your child's side, even if he complains that you aren't being fair. You need to hear and understand him in order to know what will work. Tell him why you think saving and planning are important. Let him know you realize how difficult managing money can be and how easy it is to buy impulsively.

Together, come up with a management plan that allows your child flexibility. Within reasonable guidelines, you want him to make money decisions on his own. "You can spend some of your chore money as long as you also save some every week." "When I give you your allowance, I want you to put some aside to donate." If your child receives a significant sum as a gift for a birthday or a holiday, give him a portion to use as he wishes and have him put the rest in the bank.

To help your child make spending decisions, work out a budget. "How much money do you think you need for snacks and movies?" Offer specific compromises. "Instead of spending all your money now, buy the stationery this month and the shirt later." Encourage him to save by taking him to the bank to open or make deposits in his own account. He may be excited to see his money earning interest.

Don't be too restrictive or your child may feel resentful and start lying about money and purchases. But be firm about spending you don't approve of. "You can get a different CD with your money, but not that one." "You're too young to wear lipstick, even if you plan to buy it with your own money." At these ages, your child still needs clear limits.

Your child may want to use his money for an expensive purchase. One girl saved for a tennis racket; another planned to buy a tape player. A 13-year-old paid for a lawn mower so he could earn more money cutting grass. Be sure your child understands that spending most or all of his money on a single item means he can't make other purchases for awhile. Then, as long as the item is one you would allow him to have, let him make the decision. You might question his judgment, but he will learn from the experience, whether he is ultimately happy with his purchase or not. Dealing with money is difficult, and you and your child may continue to struggle with this issue. Keep stressing your values, and show your child - by your actions as well as your words - how spending and saving can be responsibly managed.

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