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Home › Webmother's Musings

Raising Financially Savvy Kids in a World of Excess

By Elisa Ast All

It begins at birth. Our babies enter the world with everything they need ... Mom and milk ... and a whole lot of things they don't ... an expensive nursery, enough toys to keep a playgroup happy for weeks and more designer clothing than we ourselves may own. We feel that everything has to be "just right" before Baby arrives, when in reality, all he needs is to gaze at your face while snuggled in your embrace.

By the toddler years, our children have acquired more "stuff" than they will ever be able to use. We buy toy boxes, larger dressers and closet organizers in order to reign in the chaos that all these things bring.

We send our kids off to school, and that's when they begin measuring themselves against what their classmates have. The latest rage? You know ... those little scooters. Do we really need to add them to our collection of strollers, trikes, bikes, ride-on Jeeps and four-wheeled pedal-propelled cars? Do our kids "need" them? It depends on whom you ask. Where I live, the answer you'll hear most often is "yes." Why? Because if you don't buy it, your kid will be the only one who doesn't have it. And since many of us know from our own childhood what it feels like to be the one without, we'll be darned if we'll allow our own kids to feel it.

These days, keeping up with the Joneses is quite an undertaking, yet we persevere. What kind of message does this send to our children? That everything they want is there for the asking? That all they have to do in life to get what they want is whine (and whine and whine)?

As parents, it's our responsibility to teach our kids that there are some things in life we want, but cannot have ... at least until we earn them ourselves. Even young children can be taught the difference between "wants" and "needs," and the concept of delayed gratification. So how can you accomplish this? Here are some suggestions by Barbara Steinmetz, CFP:

  • Establish a savings program. Similar to an employer matching contributions to a 401(k) plan, for every dollar your child saves, you can match it either dollar for dollar or 25 cents for each dollar.
  • Offer a weekly allowance. This gives your child opportunities to save for future purchases. A general rule of thumb is 50 to 75 cents per week per year of age.
  • Open a savings account for your child. It is important that the child see the amount grow. It's helpful for children to set a short-term goal for the money, such as a new toy, so the goal can be realized quickly. Your child may be encouraged to save longer for a larger purchase ... like college!
  • Help your child understand that it is good to give as well as receive. Even with a small allowance, a child can give small gifts of his own choosing. Your child also can donate his old toys to charity. He'll feel good knowing other children are playing with items that he has outgrown.