Saving Money and Raising Children

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savingmoneyraisingchildren A clinical psychologist with nearly 30 years of experience, Dr. Shapiro is ready to answer questions, offer advice and share strategies to help you alleviate the mental stresses of money management. Send your question to and it may be answered in an upcoming column!

What parent, walking through a store with her child, hasn’t faced a situation like the following?

Child: Mom! Look at this game! Can I have it, please?

Parent: Honey, we’re not here to buy games. Now come on, we’re going to get you some socks.

Child: But wait, Mom, I’ve seen it on TV, and Jack has one, he told me it’s great!

Parent: It looks like a fun game, but it’s not a good time for us to buy it right now.

Child: Why not?

Parent: Matthew, it’s kind of expensive, you don’t need it, let’s go; you’re just frustrating yourself by staring at it.

Child: (Escalating and becoming tearful) But Mom, come on, don’t be so mean, I love this game, please …..

Managing Your Child’s Money Management

The best way to make small, everyday decisions about your child’s consuming is the same as the way to make these decisions for yourself. You can’t think these situations through on the spot; that’s impossible. Instead, we need to understand our overall situation, set some goals, make a plan that will achieve the goals over time, and then make the everyday decisions that implement this plan.

In financial terms, this is called sticking to a budget. In child-rearing terms, it’s about raising your children to have a balanced, centsible view of what they need to have, materially — in other words, not raising spoiled children.

What Do Children Really Need?

Parents who want to provide their children with a happy childhood but need to cut back on expenses are in a conflict situation. At times, they might feel there is no way they can achieve both goals at the same time. If you are in this situation, psychology research has some good news for you: Once children’s basic material needs have been met, giving them more and more stuff does not do them any good.

Kids need to have some fun things, but these things don’t have to be numerous, they don’t have to be expensive, and they don’t need to bust your budget. An Xbox isn’t really important; what’s important to children are family relationships and the emotional tone of the home. This means you can save money and provide your kids with a fine childhood at the same time.

Sound too good to be true? Consider some research by the psychologist Rand Conger and his colleagues, who conducted several long-term studies of how children are affected by economic setbacks such as parental unemployment and major drops in income. They found that serious blows to family finances affect children primarily by affecting their parents. Parents who are anxiously preoccupied by money often become withdrawn, angry, and irritable with their children. In response, many children become depressed and poorly behaved, which further increases their parents’ distress. However, when unemployed parents maintain positive interactions with their children despite financial stress, the children do not show negative changes in emotion and behavior. The key is the parents’ ability to maintain a positive tone of family interaction, not the financial situation itself.

In her book The How of Happiness, the psychologist Sonja Lyubomirsky reviewed a number of studies demonstrating the old-fashioned truth that we appreciate things most when we wait, work, and save for them. It is a happy coincidence that the child-rearing methods which strengthen kids’ appreciation of material things also save their parents money—and we’re going to make use of this coincidence.

No Plus

Because it is normal and natural for kids to want material things, these desires should not be stonewalled. Instead, material desires should be channeled and controlled. The word “no,” by itself and without qualification, is a stone wall. Occasionally this is necessary, but usually parents can add some input that will calm the immediate situation and contribute to positive character development and self-control in the child.

Parents usually need to turn down requests for one of two reasons: Either the timing is bad, or there are too many other requests, which are affordable individually but add up to too much. When parents need to turn down requests for one of these two reasons, rather than issuing a flat “no,” they can teach the child about the reasons for the “no” and how to get to a “yes.”

If the request came at the wrong time, the solution is to teach the child to wait for the right one. One way to do this is to replace a “no” with a “yes” that is qualified with a time statement. To return to our example scenario, Alison could say yes, I will buy you this game, but now is not the time; the game would make a good birthday or Christmas present.

As children learn this routine, parents can teach them to replace the yes/no question, “Will you buy me _____?,” with a time-oriented question: “When will you buy me _____?” It is possible the answer will be “never,” but this is actually quite rare. Usually the answer will identify a time in the future and perhaps something the child needs to do in the meantime.

Keep a Running List of Wishes

By establishing a running wish list, parents can teach children how to become future-oriented and patient. When your kids make requests that can’t be met immediately, in addition to saying no, suggest adding the item to the list.

In the future, these lists will provide ideas for birthday and holiday presents. Parents can share the lists with relatives looking for good gift ideas. Young people can save up their allowances and/or earned money to fulfill their wishes themselves. In all these variations, the lists provide parents with something to say in addition to “no,” the child does not feel totally stymied, and the possibility of a tantrum has been replaced by something to look forward to.

Some intensely felt desires dissolve quickly in time. When kids look back at their wish lists, some of the items don’t even look familiar, let alone desperately needed. Although parents might be relieved they didn’t spend money on this whim, this is not a time for an I-told-you-so; it’s a time for children to discover that desires sometimes feel more urgent than they really are.

Children can use these lists as tools for thinking about their material desires as a whole, so they can organize and prioritize their desires. Once they develop some arithmetic ability, exercises in prioritization can be quantified in a very meaningful, realistic way—because money is the way our society quantifies material value. With the overall situation summarized on a piece of paper, children can think about translating money into happiness in an optimally efficient way—a skill they will need all the time as adults.

Be sure to look for the next article in this series titled Parents and Children’s Material Needs here at the Quizzle Wire on Feb 27th!

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A clinical psychologist with nearly 30 years of experience, Dr. Shapiro is ready to answer questions, offer advice and share strategies to help you alleviate the mental stresses of money management. Send your question to and it may be answered in an upcoming column!

  • Chris Holdheide

    One thing my wife and I do is avoid the toy section altogether this way we don’t have to deal with situations like this, however when it does happen that we are going to look at toys and games I remind the kids up front that we are not buying anything. This way they don’t get their hopes up on getting something.

  • Dr. GoodCents

    That’s savvy parenting, Chris. You’re avoiding temptations (always easier than resisting them) and managing your kids’ expectations in an effective way. See this and future columns for techniques to use when kids bust through the preventive measures you suggest!