# 192 06/30/03 Children should know basics of the family’s finances

Years ago, I had a friend who was experiencing some tough times financially. She needed to cut back on discretionary spending until the situation improved. Her daughter, however, read the message as devastating. She envisioned selling their home, no new clothes for school and maybe a shortage of food.

I think that what led to the misunderstanding was the fact that the parents used the words, “we cannot afford” rather than the words, “we do not choose to spend.” Most people use those words when, in fact, they could buy the item in question. Why is it better to say, “I do not choose to spend my money that way”?

Children receive partial and mixed information about money from their parents. They may gather some information from overheard discussions between their parents. Or, they may be told that there is no money for clothes they want, and then they see Dad buy a new suit. Some children grow up thinking that the checkbook can produce an endless supply of funds, not realizing that money must be deposited into the account. The misinformation about credit card use is abundant!

I do not advocate giving children too much information about family finances. It is important that they be old enough to understand what you tell them and to keep it confidential. They should, however, have basic information such as the fact that a tithe is paid to the church, a percentage is saved for retirement, a percentage is saved for emergencies and a budget is followed. That information lets your children know that you are managing your money, rather than just spending it as it is earned. Children should also be taught about wise use of credit.

With all that information, it would then make sense to explain to children that you are making decisions about spending your money. If your status-conscious fourteen-year-old asks you to buy a new SUV so that she will not be driven to school in the older car, you can say, “Yes, I could afford it, but I do not choose to spend money for a new car right now.”

Hearing you say that throughout her years at home will teach her a very important concept. It will teach her that we are the ones who decide how we will spend our money. We choose to make the spending decisions without letting peer pressure, advertising or various insecurities affect our thinking. Hopefully, as an adult managing her own money she will have the confidence to say, “I’d just rather not buy that today.”