Question: My oldest just turned 16 and asked me for $5,000 for a used convertible someone in the neighborhood is selling. I told her no and she can use our car, and she threw a fit. I’m used to that, but here’s what bothers my husband: He says I spoil our kids by giving them money instead of making them earn it.
Until now, I’ve given my older daughter (our youngest is 9, and our son is 12) everything because I grew up having nothing. I made my own way and I don’t want her to lack for anything. My husband says we’re not teaching our children the financial survival skills they’ll need, but I think he’s being harsh — I don’t want to teach my children by denying them pleasure.
Anyway, we decided to see what you think. Which approach is best for our children?
— Brittany in New York
Howard Dvorkin CPA answers…
As a parent myself, I know how hard it is to look into your child’s eyes and say, “No.” Of course, every parent has endured what comes next: the tantrum, the tears, the threats. Those pass, life goes on, and we pray our children learned something — even if they don’t realize it in the moment.
Here’s what I’ve found interesting: It’s easier denying our children ice cream for breakfast than it is hundreds for a new laptop our thousands for a used car. That sounds backward, right? The more money our children want, the easier it should be to say, “No.”
Then again, children are excellent debaters when they want something, so you’re likely to hear this: “I need that laptop because I can study on it, and everyone competing with me for college has one.” Or this: “If I don’t have a car, I can get a part-time job and make more money than the car costs.”
But as I say in the video below, the real trick is teaching your children about money before they ever need to ask you for it — and doing so without letting your parental instincts overwhelm you…
Teaching our children about money even has a lofty term: financial literacy. I’m a big advocate of it at home, and I think it should be taught in our schools — although that’s still a controversial topic for some reason.
Brittany, as I said in the video, you can use Debt.com and a variety of other online tools to teach yourself about best financial practices, then pass those onto your children. Certainly, your younger ones can benefit, but it’s not too late for your now-driving daughter.
Here’s a quick tip: If she doesn’t work and can’t afford her own car, you can lend her yours. But make her pay for her own gas. Give her an allowance if she doesn’t have enough money to do that, and make her fill the tank once every week, every other week, or monthly. Whatever works for you. The idea is to show her how everything costs something — because someday, you won’t be around to give her everything.
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.