The Couple's Guide to Financial Compatibility by Jeff Motske

Author:Jeff Motske [Motske, Jeff]
Language: eng
Format: epub
ISBN: 9780738218175
Publisher: Hachette Books

SHOULD OUR KIDS MAKE A BUDGET?

Take a guess at what my thoughts are here. In a word: YES! I think everyone should make a budget, no matter how old. Or young. It’s never too early to start.

When people—especially kids—earn their own money, they have a greater appreciation for it and are more discerning in how they spend it. So kids who have a job and have bills to pay can certainly benefit from making a budget. When it comes time to buy their first car, for example, they’ll need to figure out how to budget for a monthly payment, insurance, registration, and gas, based on their income. So teaching them how to properly manage their money is important.

However, as tempting as it might be for you to manage it for them, resist! The idea is to let your kids make their own decisions, within reason. It’s important for them to experience the consequences of their monetary choices. When it comes to discretionary purchases this usually goes one of two ways: they come to realize that what they purchased was a total waste of money or, because they used their own cash to buy the item, they value it more than if it were just given to them.

This is something I can speak to personally. My daughter, Brooklyn, loves Converse high tops and has three pairs, all in different colors. Not long ago she came across a new teal pair and just had to have them. I wanted to shout, “You don’t need them! Your feet will grow!” Instead, I simply made it clear that if she really, really wanted them, she would have to buy them herself.

Now, it’s one thing to want something knowing Mom and Dad are shelling out the cash for it; it’s another thing entirely when kids must decide whether it’s worth forking over their own money. More often than not they’ll consider their decision more carefully and less impulsively. And if they do decide to go ahead and make the purchase, as Brooklyn did, they quickly learn about sales tax and the fact that the price listed on the bottom of the shoe is less than the amount they must eventually pay for the item.

As it turns out, Brooklyn wears her teal high tops quite regularly and took great pride in telling her grandparents that she bought them with her very own money! Difficult as it may be, resist the temptation to spit out the “you don’t need that!” line; instead, turn these opportunities into teachable moments for your kids.

Having said that, I do believe you need to advise your kids how not to make choices that result in disastrous consequences. If you know they can’t afford the car they are dreaming about, then you have an obligation to coach them out of making a terrible financial decision. If you can’t sway them, you’ll probably have the final say because you’re likely cosigning for the loan. That gives you the opportunity to be the adult in the conversation and put your financial foot down.

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