Read this article on the Wall Street Journal website.

August 15, 2005

Kids & Money
Drawing the Line on Spending

by Jolie Solomon

Every parent knows the drill. First comes, “I want that”—quickly followed by, “But everybody else has one.”

Parents also know that granting every request will, in old-fashioned terms, “spoil” a child. It can create kids who consider a constant stream of purchases to be their birthright, who can’t relish the pleasures they do have, and who have little understanding of choice or gratitude.

But in an age of especially conspicuous consumption—by both kids and adults—it’s hard to draw the line, or even know where the line should be.

“We say ‘yes’ because we’re tired, because we’re not with them, because we feel guilty, we’re single, we’re divorced, they do so much schoolwork, we want to have fun,” says Los Angeles based psychologist Wendy Mogel. Billions of dollars in marketing to kids, she adds, creates a “mighty foe” for parents, sending the message that “to lift our spirits, we have to spend.”

It’s easy to make spending choices when an item is clearly out of the family’s financial grasp (your teenager wants his own car) or out of bounds for a given age (your 5-year-old wants the “Mean Girls” DVD). But that leaves a big gray zone. As with any other child-rearing dilemma, it helps to think things through, plan ahead, and coordinate with other adults. Here are a few steps to help parents set limits, deliver the news—and survive the onslaught:

Parents have to be willing to say to their kids—and to themselves—“this is my decision.” Lori Gruetter reminds herself of that on almost every trip to the video store or supermarket with Cassie, age 8, and Mark, 3. “You [have] to be the parent, not the girlfriend,” says Ms. Gruetter, of Toledo, Ohio, who sells advertising time of a radio network.

At the aquarium, you decide whether to go to the gift shop.  But then you can tell your 4-year-old, “You can spend $5,” and help her do the math.  Older kids can help budget clothing purchases for the school year or plan the family vacation. Give them hands-on tools to help make them focus: for an 8-year-old, a fresh new ledger notebook where she can record her allowance; for teenagers, Quicken financial-planning software.

Rebecca Riley, of Orinda, Calif., who worked as a private banker until this spring, says she saw many children of wealthy families who didn’t understand the “nuts and bolts” of how money works. Her own daughter, Maddie, 13, is discovering how to stay in the black with her weekly fund for school lunches. She’s taken to filling a water bottle at home each morning so she has money left over at the end of the week.

“It’s good for kids to suffer, to feel sad, to experience longing, even deprivation,” says Ms. Mogel. Be compassionate, not dismissive, of their pain. But wait out the storm.

When Amy and Anmond Budish’s son Daniel learned to drive, they gave him their old but reliable station wagon. He let it sit in their driveway in the affluent Cleveland suburb of Beachwood for months, arguing for something snazzier. But when they refused to budge, he finally gave in and started driving it.

Whether it’s a box of the latest breakfast cereal or Spring Break in the Caribbean, says Ms. Mogel, don’t send signals that say, “‘You can have it, but I wish I hadn’t given it to you.’ Don’t make kids feel guilty about pleasure.”

Don’t take refuge in lines like “we can’t afford it.” That’s usually not honest, and it builds distrust. Ms. Riley’s daughter, Maddie, knows that her parents could afford to get her a $300 iPod. “But I am so not going to buy that,” her mother told her recently. Ms. Riley says she talks regularly to her kids about “values” and family choices; they spend money on books, bicycling and travel.

An 8-year-old will be intrigued by the challenge of figuring out whether she “needs” or “wants” that Juicy Couture track suit.

But know when to stop talking. Kids are experts at pushing buttons (“Why do you work so many hours if we can’t spend the money?”) and delivering reasoned arguments (“This toy will make me more creative!”). Mrs. Budish has learned to tell her son, “We’ve had our conversation, and you know how I feel.”

Just as it’s hard for kids when “all” their friends have something they want, it’s hard for parents when other adults are doing it differently. Sometimes, you can coordinate strategies. A trip to the playground will end more happily if you and the other parents agree on whether everyone will go for ice cream.

David Anderegg, a child psychologist and a professor at Bennington College in Bennington, Vt., also is a consultant to independent private schools. He encourages schools to help parents support each other. Parents at one school agreed to avoid competitive birthday parties.  (“Sarah’s was on a boat, so mine needs to have a helicopter.”)

Parents are often unconscious of how much they surround kids with talk of spending, whether it’s cost of gasoline or a new kitchen. Kids need to learn that “they can create, not just buy, an identity,” says Mr. Anderegg. Encourage kids to “make” and “do” rather than buy, put on a play, rather than go to a movie, have a “make your own pizza” party rather than ordering in; join a band, instead of just downloading music.

If you’ve been consistent about saying “yes” and “no” since your children were small, great.  But, it’s never too late to start. With older kids, be explicit about the shift in policy: “We’ve been wishy-washy about this. Mom and I have decided to set new rules.” Then be prepared to repeat yourself ad nauseam (“Remember what I said about the new rules?”).

You can even help kids out with a period of consumer detox. A month at summer camp without Xbox or access to can teach kids that there are other ways to make friends and have fun.

August 15, 2005