Central Bank of St. Louis

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  • Managing your child’s expectations when money is tight

    If you’ve got a birthday or the holidays coming up, chances are you’re starting to sweat about money. Your kids demand the most without really knowing the pressure that puts on you. You want to do everything you can to make them happy, but spoiling them isn’t good for you or them in the long run. When your child is expecting a pony in the living room, it’s better to be proactive rather than reactive.

    Little girl holding long wish list

    Be open and upfront
    Don't wait until your child is crushed to explain to them that you can't afford everything on their wish list. It's not fun saying no to your kids. But when you see that lengthy list, it's important that you take a deep breath and figure out a game plan. Sit down with your child and get ready for a tough conversation. You'll have to tell them that, with your financial situation, you sometimes have to value “needs” over “wants”. That means that they won't be getting everything on the list. It's better to explain this to them sooner so that you can manage their expectations.

    Create a budget for your child
    Once you've had a conversation with them about adjusting their list, consider giving them a budget to stay within. Tell them that while they can't have everything on the list, they can pick and choose items as long as it totals under a specific amount, like $100. This is a good lesson in financial management for them.

    Give them experiences, not items
    If your kid is having a hard time accepting this change, offer them some alternatives. For instance, instead of a pony, your next best option might be a zoo membership. Maybe you've got a boy with rock star dreams, but you don't have rock star money. Instead of an expensive drum set, buy him a month's worth of lessons.

    Teach by example
    None of this will make an impression on your child unless you practice what you preach. If you've told them that you'll need to cut back on gifts this year, you should cut back on your daily nonessentials, as well. That large white chocolate mocha with caramel drizzle you get every morning? Let your child notice that you've downgraded to a small. Start carpooling to work. Take them on a trip with you to a thrift shop and let them pick out an item. Do whatever you can to show them that you, too, are trying to adjust.

    Make a deal
    If there's a big ticket item on your child's list that you know they've been dying to have, it might be time to strike up a deal. Offer to give them half of the money for the item, but only once they have raised the other half themselves.

    If you have younger children, it might be wise to start teaching them about this now so that they won't be disappointed later. No one wants to have this kind of talk with their kid. But the truth is, it can teach them an important life lesson about the value of money.



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