Spoiler Alert

Estimated Reading Time 5 Minutes

Who hasn’t quickly put the pack of gum in the grocery cart or stood in line to buy the latest electronic must-have toy just to stop the incessant whining? How to avoid giving your child too much of a good thing.

It Started innocently.
When my son was in kindergarten, he would ask for a random toy here and there. Nothing scary: trading cards, some small toys, books, things his friends had or he’d seen in toy stores. Some he got, some he didn’t. No whining, just asking and still taking “No” for an answer. But children grow and so do their needs and desires. By the time he was in grade two, gone were the trading cards and the small toys. Nintendo DS and Wii consoles took their place. Pricier items, whinier children. Yes, the whining grows exponentially. And so do the arguments for why the parents should buy it. “Everybody in my class has it, I’m the only one who doesn’t” tops the list. I fell for that one more than once, and it felt as if I were going down a slippery slope faster than I cared to admit. The question is: should we help our children keep up with the Joneses or teach them to make the distinction between need and want at an early age? One could argue that always saying “No” could affect a child’s self esteem. Yet buying on a whim is the very definition of spoiling. What gives?
Whether parents can afford expensive toys, games and clothes is not the issue. Buying the desired item just because the child wants it has the potential to become a serious problem as years go by. By teaching our children the right financial skills they will also learn to distinguish between want and need and also deal with the frustration of not having it all.
Then and Now. There was a time when talking about money in general was considered rude, and talking to children about money was inappropriate or unnecessary. “My parents rarely talked about money, and while I did learn the value of it over the years, I decided to do things differently with my own children,” says Linda Mackenzie (not her real name), mother of two from Vancouver. Teaching children how to handle money properly seems easy, yet the reality is more challenging than I expected. It starts by talking openly with your children about money.
One of the first things children should learn is that money is earned, not offered for free. “The whole thing about money is that people trade energy for money. People work and they earn money for that work,” says Richard Cooper, president of Total Debt Freedom Inc., a debt consolidation firm based in Toronto. Children should learn about budgeting early on, Cooper advises. And they learn best by example, so if the parents have a healthy understanding and respect for money, chances are their children will learn that too. Children can have their own bank account and they can be told about what their savings can be used for later on, such as a place to live and education.

Earning vs. Spending
Some of us are spenders and others are savers. Linda’s children, aged eight and six, are a striking example of the difference in budgeting personalities. “One spends the money right away, while the other spends a little if need be, and saves a lot,” Linda says. It helps to have consistent rules, such as no buying unless the cost, including taxes, is covered entirely, saving some money and allocating some to charity. “My son started seeing the value in saving his money rather then spending it right away, which shows that good habits can be learned if there is consistency,” says Linda.
How much of your children’s earnings should be saved? Mother of two Michelle Jackson (not her real name) encourages her children to put aside a third of their allowance, while another third goes to charity and a third can be spent on toys or books. Richard suggests saving 50 percent of earnings. Linda’s children save a little more than 10 percent. While the difference may seem huge between the three suggestions, it is important to find a solution that helps avoid frustration, but empowers kids in their learning about wise budgeting. Whether they save half or less than half of their earnings, children should be encouraged to stick to saving a good chunk of their money and understand why this is necessary. “If you allow kids to spend more, they become spenders – consumers – and they don’t learn the value of saving,” says Cameron Herold, father of two and business coach (BackPocketCOO.Com) in Vancouver. As they grow, children understand the value of saving when they do it consistently and are able to buy not only trinkets but more meaningful things. Occasionally, both Linda and Michelle match the saved amount to help with major purchases and encourage their children to see the value of long-term saving. This can be a great incentive.
Spending money can be used as children see fit. Sure, they will make mistakes such as blowing it on overpriced items or things they soon don’t like. The frustration they will experience is also part of learning. Do you buy your children gifts they want but cannot afford? The experts say the less you do it, the lesser the chances of kids asking for more as time goes by. Bad habits, as we all know, form easily and are difficult to quit. “We buy toys at Christmas and birthdays,” says Michelle. “We have a budget for buying craft supplies, and occasionally books or small items from second-hand sales and fairs,” she says. But buying because it’s there or because others have it does not happen much at their house. That prevents the neverending whining that becomes part of the expectations related to impulse buying.
Children begin to understand money and budgeting by grade one or two, but that’s also when they start to want what their friends have, Cameron says. Nothing wrong with that, as long as their savings allow these purchases, which is seldom the case. If no one in the family buys on impulse but only after careful consideration, it is easier for children to understand that wanting everything they see is not the way to go.

Money-wise from day one
Facing new parenthood with financial common sense has become quite a
challenge. Not only do specialty stores abound with baby products for
every conceivable need, but there is an online market calling out to
expectant and new parents. A word of advice from Richard Cooper of Total
Debt Freedom: “Don’t change your life habits when the baby comes along
and don’t wreck your credit cards by buying everything on the shelf
either.” Enjoying every moment with your new baby should not come with
worries about having to pay off baby gear debt. Even worse is having to
pay for baby gear that – gasp – you might never use! Here are some tips
that worked for me for keeping new baby costs down:

  • Make
    a list of gear that you feel you can’t do without, then ask parents of
    older children what items they couldn’t do without. Resist buying things
    just because they look cute and you think they might come in handy
  • If someone is throwing a baby shower for you, show them your must-have list. Gifts might as well be practical.
  • The
    ultimate saving option? Hand-me-downs. But avoid items such as cribs,
    because older models don’t meet current safety standards. If you do opt
    for a used crib, make sure you get all the parts and also a user’s
    manual and check for possible recalls. Ditto for strollers and car
    seats. Pass on the antiques, no matter how charming or trendy – chances
    are they do not meet the safety requirements. 
  • Avoid costly
    classes for babies and instead opt for informal mom get-togethers or
    programs at your local library or recreation centre that tend to be more

Published in May, 2011.

Ginta is a Vancouver-based freelance writer and mother of two sons, 8
and 4. She has yet to figure out a logical response to “but Mom, if it’s
books, it’s OK, because you said reading is good.” Visit her at

Related Articles

Made Possible With The Support Of Ontario Creates