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Summer camps are getting axed.
Summer vacations at the beach are being traded for fun in the 'burbs.
These topsy-turvy financial times have parents putting the kibosh on non-essential expenses.
Eighty-six percent of parents who responded to a recent survey on Momcentral.com, for instance, planned to cut camps or vacations because of the economy.
These aren't the only items on the chopping block: 48 percent of 1,197 survey respondents reported that they have cut back on other expenses for their children.
The kids may not be jumping for joy right now, but family and personal finance experts see a potential bright side for our offspring in all of this curtailing.
"I think that maybe these difficult financial times are a good opportunity for us to teach our children to be financially responsible," wrote Holly Schiffrin, a psychology professor at the University of Mary Washington and a certified parent coach, in an e-mail.
Rearing financially responsible children requires parents to model wise spending, explain the difference between needs and wants, and teach them about saving and budgeting.
This informal financial education can begin as soon as a child is old enough for an allowance, according to Tom Howlin, a business professor at Germanna Community College who teaches personal finance.
The first step is for parents to review their own spending habits, said Sara Dimerman, an Ontario-based family therapist and author of "Am I A Normal Parent?"
"As parents, we are our children's primary role models," Dimerman said in a phone interview. "They do what they see from us, rather than what they hear from us."
Modeling wise spending in daily life is worth more than hours of lectures.
Look for those "teachable" moments, such as when you see an item you'd love to buy and your child is with you.
Let your child see you resist the temptation.
"Say to your child, 'You know, I really love that item, but I'm going to have to wait,'" she said.
Be wary of whipping out the plastic in front of your child.
"If we are going into stores and seeing something we like and putting it on credit, spending money we haven't already earned," Dimerman said, "we are modeling something we may not mean to model."
Another way to teach your children how to resist budget-busting impulse buys, Dimerman said, is with the "two weeks" rule.
If the child sees something he or she "has to have," ask him or her to wait for two weeks. If the item hasn't been forgotten by then, help the child come up with a plan to set aside money every week to save for it.
Help children understand the difference between needs and wants, Dimerman said.
Explain that needs are the items that can't wait, such as the sneakers that are too small and must be replaced. Wants are the extras, such as the expensive brand of sneakers that "everyone else" has.
Children as young as 5 or 6 can understand the difference between needs and wants, she said. However, bear in mind that reminding children of the difference will be an ongoing process.
For instance, Dimerman's 17-year-old daughter recently told her she "needed" a new binder that she'd seen.
Dimerman reminded her about the binders they already have. She asked her if the new one was something she really needed, or something she wanted.
"She said, 'it's a want, but I really need it,'" Dimerman recalled.
Parents shouldn't feel as if they can never give their children "wants," Dimerman said. Just make sure the child understands that the wanted item is not truly a necessity.
Parents can demonstrate the value of saving by opening a savings account for the child and making regular contributions, Howlin suggested in an e-mail. The child can contribute a part of his or her allowance as well. Explain the account's purpose, Howlin recommended, such as saving for big-ticket items or for a rainy day.
HERE'S WHAT YOU CAN DO
Make sure your children see that saving is for grown-ups, too. If one of the family's goals is to build up emergency savings, he wrote, keep children informed of pro-gress.
Children should also get clued in to basic household budgeting.
Here's Dimerman's suggestion for making budgeting concrete, using play money:
Figure out how much your family typically spends each week on groceries and entertainment, such as movies and dinners out. Set that amount aside in play money. Ask your children to guess how much you spend. Then show them, by subtracting that amount from the pile. Keep subtracting until they see what's left at the end of the week.
The game demonstrates the impact of even small frivolous spending, Dimerman said.
"This helps children see how when you take $10 a day for five days, that's $50 of the weekly budget gone."
Teaching financial responsibility takes work, but parents who take on the task will reap short-term and long-term rewards.
This education "not only makes children better able to understand why movie night out has been turned into movie night in," Howlin wrote, "but also better prepares them for adulthood."
Kim Baer: 540/834-0656
Email: kbaer@freelancestar.com
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Keep discussions positive, advises Sara Dimerman, an Ontario-based family therapist and author of "Am I A Normal Parent?"
Rather than saying "we can't afford this anymore," for instance, try "it's not in our budget." If you're cutting out sleepaway camps or summer trips, be sure to replace them with less expensive activities, said Stacy Debroff, chief executive officer of Momcentral "Make it fun," Debroff said, "so that it doesn't feel like a takeaway, but like a different type of adventure." Let your child see you making changes, such as packing a lunch instead of eating out, Dimerman said, or shopping at a less expensive grocery store. Be careful about having serious financial discussions, Dimerman said. "Children will often jump to terrifying conclusions about what will happen in their lives," Dimerman said. If you have lost your job, for instance, keep the discussion brief and reassuring, Dimerman said. Try something like this, she said: "It's hard on me to have lost my job, and it might be a difficult few months, but I am optimistic I can find more work. We are together as a family and we can work through this." |
