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Many parents give into weakness when it comes to spending money on their kids.
Whether it’s buying a 6-year-old a candy bar at the checkout counter or sending an adult child a check to cover the rent, the urge to spend in order to please children is powerful.
“Parents want their kids to be happy,” says Leisa Brown Aiken, a Chicago-based certified financial planner. And kids are “really good at making you feel like if they don’t get it, they’re going to be unhappy and you’re a terrible parent.”
Giving in to these impulses, however, can have serious financial consequences, says Joan Koonce, a professor and financial planning specialist at the University of Georgia. “Parents are trying to provide (kids) with these things, and sometimes it’s a bad situation because they really can’t afford it,” she says.
Worse, it creates a pattern with ever higher stakes as children get older. “When they leave their parents’ household for the first time, many of them end up in a lot of debt,” Koonce says.
Here are some financial moves that children commonly demand and how to push back.
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Buying expensive brands
Children, uncritical consumers, are highly influenced by brands and their advertising strategies. In fact, according to a Stanford University study conducted in 2001 and still quoted in textbooks, a 2 to 6-year-old child’s food, drink or toy preferences can be influenced by just a 10- to 30-second advertisement. Enthralled by the ads, kids then push their parents to spend money on expensive brands, a phenomenon so common scientists have a name for it: “the nag factor.”
“The $1.50 yogurt versus the $4 yogurt isn’t the biggest problem. The problem is you’ve set that pattern, and then when it’s middle school, your kid only wants $75 T-shirts,” Aiken says. “If your kid was buying $20 or $15 T-shirts, the rest of that could be going in your college fund.”
How to say “no”: For young kids, a fun way to demonstrate that cheaper brands and name brands are often similar is a blind taste test. Ask kids to identify which is the brand name and which is the generic. Even if they’re correct in identifying the products, they’ll notice how similar they are.
Making impulse purchases
Getting kids to appeal to parents is a time-tested way for grocery stores and other retailers to increase sales. Stores and advertisers specifically place items at kids’ eye level to get their attention.
Giving in to these impulses won’t cost you much at first, says Laura Scharr-Bykowsky, principal of Ascend Financial Planning LLC in Columbia, South Carolina. “If your kid is between 3 and 9, that’s normally the time when they’ll be in the grocery store and say, ‘Can I have that candy bar?’ And what does a parent want to do? Just get the candy bar and make them happy. It’s quick, it’s easy, it’s not that expensive,” Scharr-Bykowsky says.
But the cost of adding extra purchases to every shopping trip grows as kids get older, she says. If you’ve taught them that you’re an easy mark, you’ll face demands to spend money on everything from dessert at every restaurant to video games to expensive clothing.
How to say “no”: Instead of springing for every impulse purchase, save money you’d otherwise spend on children’s extras in a glass jar to fulfill a specific goal, Aiken suggests. That way, they can see how saving for something they want can be more satisfying in the long run than frittering away money on small items.
Splurging on a ‘dream school’
College costs have exploded in recent years. Tuition, room and board at a four-year institution averaged $26,120 per year for the 2015-16 school year, according to the most recent data from the National Center for Education Statistics.
College can also cost more than a parents initial estimate. Federal statistics on graduation rates, for instance, show that only 59 percent of students who started college in 2009 had earned their degree within six years, by 2015.
Additionally, kids often pick out high-end colleges as their “dream schools” with little regard for cost, expecting parents to pay, says Scharr-Bykowsky.
Giving in to those demands, especially when they come at a time when parents are rushing to save for retirement, can mean retirement gets short shrift, says Scharr-Bykowsky, who often hears from clients about putting off retirement.
“They say, ‘Here I am now at 57 years of age, and I don’t have a lot saved up for retirement, but it was because I had to put my kid through college,’” she says.
How to say “no”: Look at what you can do financially and communicate that number in clear terms from the get-go.
For example, you could offer to pay tuition for any in-state public university. If the child wants to go to a pricier school, make it clear he or she will have to come up with the difference by applying for scholarships or taking out student loans, Scharr-Bykowsky advises.
Overspending on weddings
If you wonder how big a drag a child’s wedding can be on your finances, here’s a statistic for you: Couples spent an average of $33,391 on weddings in 2017, according to an annual study by The Knot.
Despite that, many parents still feel obligated to write their kids a blank check, even if they’re struggling financially. “I have people who have lost their jobs and then want to go pay for their kid’s wedding,” Scharr-Bykowsky says.
Having their wedding paid for gives children little incentive to control costs and can lead to lasting financial damage for the parents for what amounts to a one-day celebration.
How to say “no”: With wedding demands you can’t afford, honesty is the best policy. “It’s important for parents to be very upfront with their kids,” Scharr-Bykowsky says. “The kid’s going to understand if you explain to him your situation.”
Discuss other needs that pull on your budget, such as saving for retirement or paying down debt, in concrete terms. While they still may resent your decision, it’s more likely that they’d rather scale back their wedding plans than cause financial trouble for their parents, Scharr-Bykowsky says.
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