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Your Children & Your Financial Well-being: 3 Ways to Make it Better

Nothing is more important than your kids, right? Well, yes, but… The real question is far more complicated, of course. If your child needed a specific medicine, I would advise you to sell the house to buy it, but if your child wants to go to a certain sleep-away camp… not so much.

You get the picture, it’s a matter of prioritizing. I see a lot of clients who say they “prioritize their children,” which is a convenient way to deflect questions about your spending. But, not here. I'm the mean lady who still questions your spending. What I see is they do not say ‘no’ to their kids, and don’t want their kids to think they are not “rich” (I’m using quotes, because what is "rich" anyway?). Sometimes the child didn't even ask for special activities, but the parents think they have to do it to keep up with the "Joneses."

Essentially, they are hiding behind "prioritizing their children" instead of facing hard confrontations and setting limits. Sometimes, that can result in becoming indebted or possibly bankrupt. I’m nobody’s parenting counselor, but I have to think that setting limits for children and saying "no" occasionally, especially for the financial good of the entire family, is not a bad thing. he children have a stake in the financial well-being of the household, because it affects their emotional lives, too. It's not just about stuff, it's about reduced stress, time together, etc.

Okay lecture over. There are 3 things I recommend when facing your children and hoping to prioritize, not just your children's desires, but your family’s overall financial wellbeing:

  1. Discuss limits with your co-parent BEFORE the questions come up. Before kids are old enough for sleep away camp, discuss what the family policy will be for sleep-away camp. You have no idea how strong you sound, when you’re not making it up on the fly.
  2. Say NO early and often. It’s hard to spring a NO on your child for the first time at 14 years old. I wouldn’t blame the kid for freaking out. Start when your kids are really young (4, 5, and 6 or earlier) to say NO sometimes to make sure they understand that they do not get everything they ask for. Try to be consistent and predictable about what you are willing to pay for and what you’re not. "Yes" seems like the easier path in the moment, but it will not be when the credit card bills come in.
  3. Teach your children how to prioritize. If you never say NO, they will grow up thinking the world owes them something and it will be tougher for them to manage their own finances. The best tool for learning financial responsibility is allowance. Give them some money each week, not for chores, but for teaching responsibility with money and tell them what they have to pay for (Pokemon, latest cool shoes, Xbox, whatever). Watch how quickly they learn!

Here's a good test: if you carry balances on your credit card and they are not because of medical bills or emergency hot water heater replacement, chances are you are not saying NO to yourself and/or your children in a way that is in line with your income. Step back and figure out how much fun money you have each month while still being able to pay down credit card debt, save a little and have a small cushion at the end of the month. Within that "fun money" amount, share with your children, but make sure it's fair to the family as a whole.

Lastly, don't tell yourself fulfilling your children’s every need is a good enough reason for whatever financial situation you are in now. You’re the adult. It’s your responsibility to know how much can be spent on fun, camp, eating out, travel, etc., and how much has to be spent on boring things like insurance, as well as how much has to be saved. Saying NO sometimes benefits everyone. Will your children remember the Xbox or that mom and dad were stressed out about money all the time?

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