Money Doesn’t Grow on Trees

We’ve seen how spoiled kids can get; whining, materialistic brats who spend money like water and believe that everything in the world (like their parents’ bank accounts) should be handed to them on a silver platter.

We automatically think, “I’m not raising my kids that way.” And so we swing to the opposite end of the spectrum. We become strict with money. We teach them to sacrifice and make do with what they have. We talk about how hard it is to earn, and that they’re already far luckier than we ever were when we were their age (insert lecture here).

Newsflash: this doesn’t work.

Giving less money to kids won’t teach them how to respect it, or use it wisely. You still make all the decisions. You still make them dependent on when you see fit to give it to them. They don’t actually learn how to control their spending themselves. They don’t appreciate the value of saving because there is something more important than their immediate whims. If they don’t spend, it’s because Mom and Dad won’t let them. Not exactly the kind of financial prudence that will last them a lifetime.

Teaching your kids how to handle money responsibly may actually involve giving them just enough extra cash that there’s room for them to save (or squander). Set an allowance. Give it to them each week. Let them decide how to portion it out. But they can’t ask for extras for dates or clothes. They can’t tell you they run out in the middle of the week and expect you to fork over an extra twenty. They handle their money, and they face the consequences. If they need more money, then make it clear to them how they can earn it: by finding a job and working for it. End of story.

Of course the best way to completely ruin this learning opportunity is to give them a credit card. They run out of money? No problem””they’ve got plastic! By the time you get the billing statement and ground them for several weeks, they’ve already got what they wanted.

Remember: credit cards are just convenient ways of deferring payment until the end of the month so you don’t have to carry around your cash. But in the hands of somebody who has no money to begin with, it quickly becomes a habit of borrowing against something you haven’t earned. So let them use cash, where they can grasp the basic math that if you have $20 there’s no way you can afford something that costs $50, and they’ll get the discipline before they get the credit lines.

“But what about emergencies?” you ask. Now exactly how many real, life-threatening emergencies could they actually solve with a credit card? And how many imagined emergencies (like a really good shoe sale) could they have easily avoided if they had just learned to save in the first place? So they’ll be frazzled, and a little disappointed, once in a while. It won’t kill them. But it will teach them, and far more effectively than any lecture you could’ve given them.

Make your children feel the force of money by having to make choices about how to spend it that have consequences. If they need more money than they receive in allowance, make them work for it by finding a job.

But please don’t provide a never ending source of cash that makes them (perhaps unconsciously) feel like money grows on trees.