Many parents provide a way for children to learn to manage money. Whether it’s through an allowance, or whether children earn money by performing various tasks, the idea is the same: Give children money to control, and help them learn valuable money lessons about making good financial decisions.
But what if your child wants to buy something stupid?
Consider Letting Your Child Make Mistakes
It’s tempting, as a parent, to step in and protect a child from his or her own bad decisions. After all, you wouldn’t let your child walk in front of a car; why would you let him or her buy something that you will be ignored in a few days?
While you probably have your child’s best interests at heart, in the long run it can actually be detrimental if you insist that your child only make purchases that you approve of, and that you think are smart. Your child might miss out on the lessons that small mistakes can teach.
Allowing your child to buy something that he or she regrets can open the door for a teaching moment. Let your child buy the item, and when he or she tires of it, or wants something else, count out the money that is left. Point out that there is not enough money to buy something really important to him or her because the money has already been spent on a passing fancy.
This can open the door for discussion about priorities, what is really important to your child, and making spending decisions based on what he or she actually wants, rather than buying a fad item because everyone else is making the purchase. This is the sort of lesson that sticks with children because it hits home, and it is based on experience.
Put Responsibility on the Child
Letting your child make mistakes doesn’t mean that you have to sit back and watch them learn from trial and error. Before your child makes the purchase, talk about it. Point out some of the problems with the purchases, and offer alternatives (saving up for a cooler, but more expensive toy, or buying something else). Then, let your child know that the ultimate decision is his or hers — and that he or she will be expected to abide by the consequences.
Once your child makes the decision, talk about it later. Make sure your child knows that you won’t be “fixing” the mistake by getting something else for him or her. This process helps your child learn to take responsibility for his or her own money decisions and actions. This is important if you want your child to be proactive about financial decisions later in life.
While there is no way to guarantee that your child won’t make devastating money choices later, exposure to a critical thinking process now can help head off problems later. And, allowing your child to make small mistakes now, and learn from them, can lead to a savvier adult who doesn’t make even bigger mistakes with money down the road.