Hiking is a great, low-cost family experience!

Did you raise your kids to be prudent spenders and good savers of money? After a slow start, I turned it around and can see the changes in my kids. It’s not too late for you to do the same for your kids.

It’s much easier these days to spend money on material things, especially if you can afford to do so. What’s worse is the peer pressure to keep on with the Jones’ or their kids. Like many of you, when my wife and I grew up, a family dinner at Ponderosa was a BIG family night out. I fondly remember the all-you-eat buffet and especially loved the chocolate pudding. I grew up in Arlington Heights, IL in a middle class family of four, We did fine financially compared to our neighbors (the houses were all so much smaller back then). We didn’t go out to eat much and I remember getting change back for my dollar at McDonald’s after ordering a hamburger fries and a Coke.

I have succumbed to the peer pressure of keeping up with the Jones’ more than I like to admit. If only I still lived in the nice three bedroom ranch we first bought in Glen Ellyn for $220,000 I would have boat loads more money today! My mortgage would have been paid off years ago. I would already be financially independent had we not moved to a bigger, more expensive home. with a super low overhead and no mortgage payment, I probably would have been able to save close to 50% of my income today had we not moved.

IMAGINE BEING ABLE TO SAVE 50% OF YOUR INCOME!

Spoiling Kids While Living in an Affluent Neighborhood

Just living in an affluent town (DuPage County is in the top 2% for median income in the US) makes it nearly impossible not to spoil my kids. Our kids know what they see and think that’s how everybody lives. Where’s the reality check for them? How well are we preparing our kids to fly on their own and be financially responsible and independent?

I see myself as an example for my three teenage children. Believe me, your kids watch you and soak up like sponges the actions you take with your money.

While I’ve been far from perfect in the frugality war, there are many things I am proud of.

For instance:

I seldom give my teenagers money for entertainment or clothes – I usually tell them to use their own money
My kids had their own savings accounts since they were in grade school – I matched their deposits to encourage saving more money
I keep cash in my pocket for almost all my spending at a register – this is HUGE! When we are at a store and they ask if we can buy …….fill in the blank….. I usually say “no, I don’t have enough money” which creates the concept that money is scarce. If I used plastic, my kids wouldn’t get that message. It’s worked great for me. This summer all three of my kids had multiple jobs, some days all three were out the door before 7:00am!
I go out of my way to teach my kids that every retailer is trying to get you to part with your hard-earned money. The best way to do this is to not pay for your kids non-necessities. This might include buying them lunch, but not their drink. They can get water or pay for the drink themselves. You might think I’m nuts and take this to an extreme, but I’m trying to teach my kids to think before they spend. They usually go for water rather than using their own money for a drink. I guess the soft drink isn’t that high of a priority after all.
I mow my own lawn – sure I could afford a service, but showing them I take pride in my property and don’t just pay others to do work I can do for myself is important. I’m the least “handy” guy I know, but I can push a lawn mower.
I only buy used cars and keep them for 8-15 years. Kids love cool cars, especially boys. I can’t think of a worse financial purchase than a depreciating car that gets poor gas mileage.
One of my favorite gifts to my kids is giving them each Christmas money ($50 a piece now) to use exclusively for Christmas shopping for the immediate family. They absolutely love shopping for each other and this really ramps up the spirit of giving.
Eating most meals at home and brown bagging lunch. I’m fortunate to have married a great cook that has prioritized cooking for her family (not an accident). That’s how I grew up. I was a happy kid with two PBJ’s for lunch every day going to school. Most kids today spend more money on food than I do. I think eating out is a huge waste of money. I enjoy a date night with my wife, the ambiance of the restaurant, the friends and atmosphere, but I’d be broke if I did it as often as most people do. For example, I usually have breakfast at my mother-in-laws on Saturday mornings, but much to my chagrin, she wasn’t home last Saturday. The alternative was that I took my daughter to a breakfast place on the way home. We had an omelette and blueberry pancakes, $30 later I was dumbfounded how much I just spent for what normally costs less than five bucks. Yes, I spent cash and didn’t use a credit or debit card.

One not so obvious problem of having kids is spending too much money on less than necessary kid related expenses. Most of us struggle with our discretionary spending. If you only knew this is often the main reason for lack of financial success. If you don’t have the lifetime saving account balances you want, look no farther than all the money you blew on your kids.

Our kids start sucking money from us with boutique bought baby clothes. By the time they can walk they learn how to cry or put their hands out until they get what they want from loving parents. In grade school, candy and ice cream were the most popular requests. These days, an iPhone tops the list for most kids. Now that I am soon to have three kids in college, money for clothes leaped to the top of the list followed by requests for money for food and gas when they go out with their friends.

When is it time to say “no”?

“The sooner the better” is the lesson I’ve learned the hard way. Most parents I know have spoiled the heck out of their kids by filling their closets with clothes, eating out all the time, and paying for travel sports and all the related costs. I, too, have failed many times in some of these areas.

In my family we have finally learned the sooner we say “no” the better for our kids sake. As parents we want our kids to grow up and be self-sufficient yet by giving them money for stuff we are often stunting the very growth we are hoping for.Shut Up and Take My Money

It’s impossible to go back in time and calculate how much money we would characterize “wasted” on dumb purchases, but if we had saved that money instead I wouldn’t be surprised if it could have paid for one year of college at a Big 10 school. Just $5/day from when they are born until they turn 18 at 8% would grow to almost $50,000.

Has all of our well-intended spoiling set them up for failure in the real world? “Give a man a fish and he eats for a day, teach a man to fish and he eats for a lifetime.” Do you want your kid(s) to be a hard worker(s) when they grow up? Then stop buying stuff for them and give them ideas how they can earn their own money. Learn to say “no” often.

I feel like a lot of us are giving our children a false sense of what it may be like for them when they leave the nest. I probably sound like an old fogy, but I think many of our kids will never enjoy as lavish a lifestyle as the one they grew up in. The senior citizens I know did well because they learned to be frugal from their parents due to living through the Great Depression. They tend to be good savers and only buy what they truly need. Compare that with today’s 40-55 year old parent that experienced an amazing economic boom in the 1980’s and 1990’s. Salaries, bonuses, stock, bond and housing markets all boomed providing a very wealthy group of parents.

Q: How well are you doing financially?

A: How long you could go without a paycheck?

This generation of parents didn’t seem to inherit the frugal gene from their parent’s and saying “yes” most of the time to their kids is part of that. They will feel the pain when they have to borrow to pay for their child’s college tuition or do not have nearly enough money saved for retirement.

I’ve been thinking a lot about this lately as my three teenagers hardly ever ask me for money anymore. Oh, they used to ask all the time. I probably trained them to do that by saying “yes” so many times in the past. I helped create these dependent, money gobbling monsters and I wasn’t sure if or when it would stop.

No surprise, the money requests stopped a couple of years ago when I finally started saying “no” most of the time. Now they seldom ask for money.

I can’t remember asking my dad for money when I grew up, not once. Asking him for money to go shopping, or gas money, or for spending money when I was going out with my friends was not something I did. I don’t think it even crossed my mind to ask him. I spent what I earned (or won from my friend’s during our weekly poker game) and that was my only option. Nowadays kids ask for money all the time, for everything.

Spoiling Kids Could Make Them Rotten and You Poor

I think it’s harder than ever to say “no” when you have the resources to say “yes”. Many of us have much more disposable income than our parents did. It would be easier to say no if you simply didn’t have the money, right?

A great way to see how badly a child wants something is to not buy what they ask for and see if they use their own money to buy it. This works for things as simple as items in a vending machine or a $4 glass of orange juice at a restaurant. They don’t say no because they don’t have to.

Should you be surprised if the son or daughter you spoiled rotten comes home from college and isn’t in a hurry to find work because you gave them everything growing up? Maybe they figure they can sleep in their bed, eat your food and borrow your car when they need it. What’s the rush to get a job?

It all gets back to this: