When social pressure becomes financial pressure

By RIFKA LEBOWITZ, SUZY KAHATI
September 6, 2010 23:55

How do you find the balance between keeping your spending in check and allowing your kids some freedom to choose what they want?




When social pressure becomes financial pressure

students kids school 88. (photo credit: )

It’s back to school again, a time when social pressure for kids is matched by financial pressures on parents.

The visit to the school supplies shop is something most parents dread; in addition to all the books and school uniforms that need to be purchased, there are all the extras that can be very expensive. The pencil cases, diaries and bags can range from reasonable to high prices, and your kids may not agree with your choice.

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So how do you find the balance between keeping your spending in check and allowing your kids some freedom to choose what they want? A great way to deal with this challenge, boost their self-esteem and increase their financial IQ is to involve them in the decision-making process. Explain to them that the budget for schooling is X, which is divided into books and clothing (Y) and accessories (Z). While you may not have much control over X and Y, you can be more flexible in Z.

Explain to your children how much is available for accessories, and make a list of everything they need to buy. Allow them to prioritize and decide what is really important to them. Maybe your son really wants a Batman pencil case and is prepared to have cheaper notebooks and pencils to be able to afford it. If your daughter has her heart set on a specific diary, find ways to cut back on some of the other accessories.

If you think your children’s priorities are wrong, explain it to them. But it is important to respect their opinion and allow them some degree of choice. For older children, let them make the priority list.

You can give them the money to let them spend how they want, with the condition that all items on the list need to be bought.

You will be surprised how resourceful children can be when given this task. Parents need to use their discretion to determine whether their children can go shopping by themselves.

Our experience as family financial advisers has shown that as soon as children are involved in the decision-making process and are given some responsibility, they are less likely to feel deprived; instead of having a decision imposed upon them, they become an active partner in the decision-making process and are less likely to reject the outcome.

Another issue that comes up around this time of year is brand-name clothing and fitting in with your peers. What happens if everybody in the class is wearing a brand-name item of clothing and your child desperately wants it. Is there any way to resolve this situation? If you have the budget for it, and you want to buy it, go ahead; money is there to be enjoyed. If you don’t have the income to buy that expensive item but you want your child to have it, tell them you will put it on your priority list for next month.

Your children will realize that you are listening to their requests and are finding a solution rather than just saying no. It is very important that after negotiating with your child and agreeing to buy something the next month, that you keep your side of the bargain.

We recommend not using the item later on as bargaining material – “If you don’t clean your room, I’m not going to buy Y” – because this is detrimental to your child’s relationship with money.

Another solution is to come to an agreement that you are prepared to give half the amount and they contribute the other half. Hopefully they have some savings from pocket money or from working.

Also ask them to do market research to find the best place to buy this item; most of this information can be found on the Internet or you can introduce them to Ebay. See if they (or you) can find an alternative way of getting the item – a birthday gift, a gift from grandparents, etc.

Even if you have the money to spend on expensive items, consider whether they are really something you value. It is important to teach children the value of money and spending wisely, no matter what your income level.

We strongly recommend that you don’t go into overdraft to buy your child the brand-name item; it’s detrimental to your bank account and is a dangerous financial spiral to be caught in. While you are still paying for the overdraft fees, your child might outgrow the brandname item and ask for another one.

If you can’t afford to purchase the item or it is not high on your priority list, what happens? Here’s an important lesson: Far more important than having the item is having a healthy attitude to money, understanding how to prioritize within ones means and being content with what we have.

Although children might initially be upset that they are not getting XXX, if they are party to the decision-making process, and if you are open with them and explain why a particular item is not on the shopping list, it is easier for them to move on than if they were not involved at all, and they will feel less deprived.

George Orwell writes in Animal Farm: “All animals are equal, but some are more equal than others.” As adults we are aware of the difference between people in all aspects of life, including financial. An important lesson to instill in children is that in life we don’t always get what we want.

The greatest gift we can give our children is to help them accept who they are, no matter what their financial situation is; to teach them to be themselves and not be jealous of others’ material possessions. This will give them a skill for life far more important than keeping up with peer pressure. They will learn to be content with what they have. As it says in Pirkei Avot: “Who is rich, he who is happy with his lot.”

rifka@plusfinances.com suzy.kahati@gmail.com Rifka Lebowitz and Suzy Kahati are family financial advisers.


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