Recession Lessons for your Kids

WRITTEN BY AKAISHA KADERLI of RetireEarlyLifestyle.com

When it’s time to tighten the purse strings, figuring out how to bring your kids on board can sometimes be quite tricky. Retirement expert and financial advisor Akaisha offers some brilliant practical tips to help you embrace – and even love – a new lifestyle of economical living…

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Teaching our Children to be Money-wise is a Great Gift

Recession Troubles?

Take it as a gift.

Recessions and the current changes in the job markets give us opportunities to reorganize ourselves in ways that are more productive and responsible. One of those areas could be a correction in our financial values — and those we are imparting to our children.

The days of being blissfully unaware of what something costs may be behind us, but that’s not necessarily a bad thing. If you are a time-crunched parent who fell into the trap of granting your children their every wish, you may find it’s harder to do when you’re anxious about the economy or keeping your job.

Parents play the greatest role in teaching young people about money, so tightening the family’s belt could be a gift in disguise.

Financial Philosophy

If you can no longer keep up the financial pace you have set, or have changed your financial goals, it’s time to look at your spending philosophy. What drives your financial decisions?

It's never too early to teach our children about value

It’s never too early to teach our children about value

There is no shame in paring down superfluous spending, and financial prudence brings awareness to your life that can’t be purchased. What better tool could you provide your children than training them to become intelligent consumers and investors? Does your child know the difference between a want and a need?

Team Family

Parents are a powerful force in shaping their child’s approach to spending, and you are their best hope. If your child pushes back at you, it’s because he wants to know where you stand.

Every parent wants the best for their child

Every parent wants the best for their child

Work from your personal value system instead of caving in to pressure to buy. Communicate with your spouse to get on the same financial page. Make sure your priorities are similar. Be in agreement so your children won’t play one of you off the other’s weakness. Showing unity in beliefs and goals is crucial; it’s teamwork in action.

Having ‘The Talk’

There is no better time than now to talk to your children about money. Speaking from your own solid example rather than from a reactive position when emotions are high is more convincing. Take advantage of teachable moments.

Our children will rule the world someday. Give them tools

Our children will rule the world someday. Give them tools

Helpful Examples

When you decide to eat at home instead of going out, physically show your children the money you save by making this decision, and what it could be worth in the future if invested. If you are working toward a family goal, put that saved money toward the goal and show them how it’s becoming real and reachable. Depending on the age of your child, you could make a colorful graph or show percentages of how close you are to that goal.

If your child wants a new $60 skateboard plus a new pair of sneakers and you can only afford one or the other, let them decide which item is more important. Purchasing both items just to keep the peace mutes the lesson. If you’re not going to buy the item, explain why. Encourage your children to save for it themselves, and consider offering to match some of their savings.

You can achieve anything when everyone works together

You can achieve anything when everyone works together

If impulse buying was the old norm for your children, suggest waiting a day or two to think about it instead. Help them locate the item on sale or find a similar item without the brand logo. Physically show your kids the savings between the two prices to illustrate the point.

Teaching responsibility for financial decisions is crucial to building strong adults. You are not doing your children any favors by supporting a reality that they will not be able to sustain when they reach adulthood.

Involve Your Child

If your kids have received most of what they’ve asked for, they won’t understand the link between effort and reward. To get that lesson across, let them manage their own money. You may find that where your children happily spent your money, they are misers with their own cash.

Children can easily learn fiscal responsibility

Children can easily learn fiscal responsibility

Try These Tips

Begin with stating clearly which expenses you’ll pay for, and to what extent. Decide how much you will pay per month for clothes and how much you will match their savings toward larger purchases. For younger children, perhaps giving an allowance plus offering payment for tasks above and beyond their usual chores will work. Then have them be responsible for a small expense. For teens, encourage them to get part-time work.

If your children want something, let them save for it and chart their progress. If it’s a large goal like a musical instrument or a car, speak to them about insurance, upkeep and the pros and cons between used cars and new ones. Discuss the possibility that you could help out with the remaining third of the price if they save for the other two-thirds. For longer-term goals of two years or more, you could match them dollar-for-dollar.

Allow your kids to be accountable for purchases. If that scooter, bike, or digital toy bought on impulse turns out to be a mistake, it’s not your job to be a financial rescuer. Allow your children to complete the process of purchase on impulse, grief or disappointment, and then help redirect their financial focus more productively. Selling that unwanted item on an online auction or Craigslist can help recoup some of that lost money. Let it be a teachable moment.

Involve your Extended Family

To ensure that this new financial outlook has staying power, enlist aunts, uncles, and grandparents to participate. When everyone clearly knows what the goals are, it’s easier to be on board. Ask for their support.

This financial training will build strong adults

This financial training will build strong adults

For birthdays and holidays, why not have grandparents contribute to a college fund? Or aunts and uncles could write a “sharing check” to your kids, with a portion of the amount to be shared with a charity of your kids’ choosing. This action requires your children to think about the value of gifts, and the reasons for donating a portion to an important cause.

When your kids purchase pet food for a local animal shelter and then go with you to the shelter with the donation in hand, this experience makes for a solid memory. It also gives you time with your kids and lays the foundation for giving and sharing to be part of their lifestyle.

The current financial climate with all its changes can help you bring a consistency to your heart and to your wallet. There are countless opportunities to get back on track, and we think you’ll find the rewards to be more than monetary.

Do you have more tips to share on this topic? If so, please let us know in the comments below. Also, if you have family and friends who may enjoy this article, please pass it along to them as well by using the handy share buttons below.

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One response to “Recession Lessons for your Kids

  1. I’d like to thank Akaisha for another wonderful article! So often we consider bad things as negative impacts on our lives. It’s so refreshing to see just how easy it is to change our perspective on something and turn the bad into good! Thanks Akaisha!

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