Monday, May 18, 2009

How to Unspoil Kids: A Crash Course from Money Magazine

What do you give to a teenager who has a lot of stuff, including a $1,700 designer purse? The answer: A brown bag of reality.

The June issue of Money magazine offers an insightful and practical guide for parents seeking to "unspoil" their kids. The piece offers solid advice for parents who have lost income or face layoffs. Here's a quick overview:

The problem:
"We've been extravagant with our kids and ourselves," says one mom. "Now we're readjusting."

The solutions:

  • Downsize birthday parties: Veto extravagant birthday parties.

  • Fewer gadgets: Parents are declining to replace misplaced electronic toys.

  • Yanking credit lines: Shopping trips fueled by plastic credit cards have been grounded.

How to correct bad financial habits:

  • Full disclosure: With complete honesty, identify how badly your child has been spoiled and how you have contributed to the scenario.

  • United front: Parents and other adults involved in a child's life have to stick to the same rules about money, spending, presents and other fiscal habits. Kids will exploit holes and inconsistencies in the financial network.

  • Recruit the kids: Offer age-appropriate explanations and lessons about the current economic environment and family finances. Teach children and teens kids how to budget their money and allowances.

  • Be a role model: Money offers a three-point plan for parents: 1) stop spoiling yourself, 2) be transparent about your own spending and saving priorities and 3) "stick to cash."

  • Build strong work ethics: Household chores and part-time jobs create a solid connection between the value of hard work and the value of a dollar.

  • Ignore whining: "As bad as you feel, don't cave," says Money magazine. "Doing so sends mixed messages and teaches that pushing back works."

Sharon is the author of the Frugal Duchess: How to Live Well and Save Money and a contributing author in Wise Bread's 10,0001 Ways to Live Large on a Small Budget.


ctreit said...

Funny thing that you wrote this post. I was thinking of a similar post this morning, when I saw a crossing guard put out his stop sign to let a kid and her mother cross the road on a red light. When did we decide not to teach children any discipline which includes crossing an intersection at the "Walk" light only? If we don't teach our children such simple rules, how can we expect them to learn the more complicated rules of responsible personal finances?

aardvark said...

Reconsider battery consumption. We found they were being used up by the handful as if they were free from the economy-sized package in the drawer! Limit by having them rationed by number/time or by having the child pay all or part of the cost.

Reconsider advances/loans on allowances or extra chores. "I'll pay you 'right back' " was getting waaaaaaaaay too common.

[If you allow a cell phone:]
After one bad experience (we were rather naive about certain charges and capacities), we went to a "pay-the-month-in-advance" not after system, PLUS requiring a deposit for potential overages (equal to a month's bill). This is actually similar to what soon-to-be-adult teens will encounter in the real world as they face rent, utilities, etc. that require prepayment and security deposits. We also drastically modified the account as to allowed usage.

In general, we have found "reality therapy" to be extremely useful and kinder in the long run.