savings

Saying Yes to Your Kids

You shouldn't feel guilty about spending money on your children -- when the occasion is right, that is.

My previous column on how to say no to your kids sparked an interesting reaction from one of my Kiplinger colleagues, Stacy Rapacon. Stacy was working on a “Starting Out” column, and one of the sources she interviewed made the point that young adults should ask their parents to help them fund a Roth IRA so they can open an account early on. Stacy suggested that I follow up my column with another on when to say yes to your kids.

Great idea, Stacy. After all, in the real world, it’s natural for parents to want to spend money on their children (or let their kids spend their own). The key is to have good reasons for doing so. Here are seven occasions when it’s fine to say yes without guilt or reservations:

When kids want to blow their allowance. The main purpose of an allowance is to give children experience in deciding how to spend their money. So if you try to control how every cent should be parceled out, you defeat the purpose. It’s fine to set some rules -- I recently wrote about a couple who decided not to let their 6-year-old son spend his allowance on a virtual game (see Teaching Kids to Save). But if your children want to buy a toy that you suspect will soon break, or a video game that they’ll soon tire of, or an item of clothing that will quickly be out of style, let them make their own mistakes and learn from the experience.

When they receive gift money. If we’re talking about, say, several hundred dollars from a generous grandparent, you might want to put the bulk of it into the bank. But the gift-giver probably wants your kids to have some fun with the money, so let them spend a portion. When my children were young, their grandmother always sent them a birthday check, which we deposited in the bank, plus $1 in cash for each year of their birthday. That was theirs to spend.

When they reach a savings goal. It’s tempting to encourage kids to hang on to the money if it has taken them months of doing chores or working at a part-time job to accumulate enough for a new game, an item of sports equipment or a class trip. But enjoying the purchase is the reward for all their efforts, so don’t spirit the cash off to the bank or try to talk them out of spending it. Once it’s gone, they’ll have an incentive to start all over again.

When they make a reasonable request. Let’s say you’re shopping for back-to-school clothes and your kids ask for a new backpack or a lunch box or a package of glitter pens. Seems to me that the cost of a backpack is a small price to pay if it means they’ll be excited about setting off for school. And if they want to stop for lunch at McDonald’s after your shopping excursion, why not?

When they’re willing to pitch in. Suppose your 13-year-old wants a new video-game system or a tablet or his own computer. You don’t object to the item per se, but you don’t think it’s necessary, or you don’t want to foot the entire bill. If he’s willing to chip in for a portion of the cost, it’s reasonable to say yes to that deal.

When they ask for something that will benefit them in the long run. Kicking in the cash to help children start Roth IRAs with their summer earnings is one example. As long as kids have earnings from a job (income from babysitting or mowing lawns counts), they can contribute up to $5,500 a year or their annual earnings, whichever is less. Another example is paying for college or other post-secondary education. You don’t need to bear the entire burden, but I think it’s a parent’s responsibility to help kids get the training they need to succeed on their own.

When you want to surprise them or share an experience. Part of the fun of being a parent is buying things for your kids or taking them places you enjoy, too. Just make sure that when you say yes, you do it because you want to -- not because you’re afraid to say no.

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