Most of us struggle with wanting to compete financially with our friends and family, and even our peers. When we see a friend with a nice car, huge house, and beautiful clothes, it’s tempting to try to match that person, but many of us can’t afford to spend like there’s no tomorrow. Our kids face constant peer pressure at school and with friends, and many of them feel the need to spend money in order to impress and keep up with them. Peers influence our kids in many different ways, including encouraging them to steal, cheat, use drugs or alcohol, or participate in other negative behaviors. While these behaviors make poor spending habits sound like a small issue, children need to learn to save money and spend wisely. Here are five ways you can help your child if he or she is struggling with the need to spend like his or her peers.
1. Set a good example
When we regularly indulge in purchases that we don’t need, and especially if we regularly talk about or verbally covet other people’s things, our kids learn from us. If you struggle regularly with peer-pressure spending, you can change your own habits, as well. If you’ve made mistakes in the past and your child has watched and learned from you, discuss your own mistakes with your child. Children need to hear the importance of saving and of spending wisely from their parents, and your willingness to admit your own mistakes will say a lot.
The T. Rowe Price 2013 Parents, Kids & Money Survey found that while 73 percent of parents report that they are having regular conversations with their kids about money, the children of these parents reported that the conversations happened less often. If you have a conversation with your child about money, make sure that the conversation is significant. Only 19 percent of children surveyed strongly agreed that their parents encouraged them to talk about money.
2. Take your own money out of the picture
If you are currently enabling your child by giving him or her money to keep up with peers, stop doing it. It is really hard to see your kid feel left out or even picked on, and it’s possible that your child’s friends or peers may give them a hard time if they can’t follow the hottest trends. But you have to decide if you want to teach your child about responsible spending or if you want them to keep up with their peers. This isn’t to say that you shouldn’t help them pay for things — rather, make sure the things you are helping them buy are good investments.
If you only pay for the items you think are necessary (plus a few gifts once in a while), your child will have to either let go of that reckless spending habit or he or she will have to get a job. Once your child does get a job, especially if you talk to him or her about saving regularly, your kid may learn to value money more in the bank than in the clothing wardrobe.
3. Help your child set savings goals
If your child is regularly spending money without saving any of it, it may be time to help him or her set a savings goal. Especially as children turn into preteens and teens, it seems like they would have the ability to think about saving long term, but don’t assume they do. You need to talk to them about saving, otherwise they may not learn that skill on their own. You can go about this in two different ways: you can encourage them to save for something big that they want, which will hopefully cut down on their impulse shopping, or you can encourage them to save for the future. Your best bet is probably to encourage them to do a combination of both types of saving. If they can contribute regularly to long-term savings, it is perfectly reasonable for them to also spend some of the leftover money on things they want.
You can also encourage children to help participate in setting family savings goals so that they can see a good model. According to the Parents, Kids & Money survey, 39 percent of parents sat they include their children in conversations or decisions about family savings goals.
4. Talk to your kids about financial matters
Kids want to learn about money, and this involves more than just teaching them not to peer-pressure spend. Thirty-four percent of kids surveyed wanted to know how banks and credit cards work, 29 percent wanted to know how to manage money, 27 percent wanted to know about inflation and costs, 23 percent wanted to learn to set savings goals, and 22 percent wanted to learn about long-term savings goals. These numbers suggest that children want to know more about money –they just might not believe that their parents really want to talk to them about it.
If you can discuss money regularly with your children and ask what they want to know, you will have a huge opportunity to teach them valuable life lessons. The more that your children know about money in general, the more likely they will be willing to save and spend carefully. If your child understands inflation and understands the opportunities for interest when you save, he or she may be more likely to put his or her money in the bank than to spend.
5. Be forgiving
Depending on how long you have been battling this problem or how much your child has spent, you may be feeling extremely frustrated. Try to be forgiving anyway, and give your child a chance to get his or her spending in control (with your guidance). Seventy-four percent of kids who were surveyed said that they tell the truth about money matters. If your child is telling you the truth, even if it isn’t what you want to hear, you should be encouraged, and you should forgive them if they ask for help.
This doesn’t mean you should allow your child to get away with stealing from you (or anyone else), or borrowing money from friends and then asking you to help them pay it back. However, if your child is trying to have a conversation with you, and is also trying to tell the truth, then you should be open to working with your child. The more honest, thorough money conversations you can have with your child, often the more likely your child will learn to respect what you say and try to save his or her money.
6. Encourage and set limits
At some point, if your child just isn’t getting the hint, you will have to set some serious boundaries. If you’ve tried taking your money out of the picture and your child is still spending recklessly, it might be time to set more serious consequences. You can start by taking away other privileges, like television or time with friends. If your child is participating in poor behaviors like stealing, then you will need to enforce harsher consequences. If you believe that the problem is the people that your kid is spending time with, you should encourage your child to stop spending time with those people – you may have to stop your child completely from being with these peers or friends.
It is completely normal for your children to want to spend money, and they should be able to. However, when their spending habits get out of control, you will be doing a favor by helping them to learn about saving and about proper spending.