Kids learn a lot from their parents, and financial smarts are no exception. A study from North Carolina State University and the University of Texas found that children pay close attention to financial issues, and also found that parents should talk to their kids about money so that their kids won’t develop misconceptions. Knowing how to talk to your kids and especially how to teach your kids to be smart with money can be difficult. There are many ways to teach kids about money, including making them work for their money (through an allowance), teaching them the importance of saving and, of course, trying to make learning about money as fun as possible. Another important step is to teach your kids the difference between wants versus needs — and part of the way that this distinction can be understood is by learning how to say no when your kids ask for things they don’t need.
Your kids will probably grow up hearing you say no often, but for some parents, saying no to things that kids want can be difficult, especially if the item or activity is affordable. We all want to please our kids, and many people want to give their kids the things that they didn’t have while growing up. However, it’s really important to be able to say no to your kids when it comes to financial matters. Teaching your kids that they can’t have everything they want will help them prioritize their needs later in life, and hopefully, will help them to value their things and be responsible with money.
If you want to keep your negative response as positive as possible, there are ways to say no that will allow you to do that. According to MSN Money, you can try offering alternatives (which can be an effective method of teaching your kids about how much things cost as well). You can also set a budget and be honest with your explanations. Although these suggestions work in general when saying no, they are particularly effective when it comes to financial matters because your kids will learn about money when you talk about your budget and when you are honest about your finances.
In addition to being comfortable with telling your kids no, you also need to teach them the difference between wants and needs. From a young age, most children will understand that they need water and food. You can also explain the way that a job works (you make money in order to pay for food, shelter, and even the lights and heating in your home). Explain why you need these things; this might be especially necessary when a child is younger, and often demands things because they want them. When a child is very young, you can keep your explanations short. For example: “The teddy bear costs money, but we also have to pay for the pasta dinner we are having tonight.” As a child gets older, you can explain more about how you prioritize your budget to make sure you can afford the things that your family needs.