Is Your Child A Money Hoarder Or A Big Spender?
When my husband was a little child, his mum would give him and his older brother money to buy ice cream whenever they went to the sports club. He would run eagerly to the ice cream shop, dreaming of a waffle cone overflowing with vanilla and chocolate ice cream, topped with chocolate chips.
Alas! All he got was the ice popsicle, the cheapest version of an ice cream available. Why? Because his brother was tasked with the money and the buying decision. Till today, my mum-in-law and the boys love to bring up this story and have a good laugh about it.
So, how do children actually make purchasing decisions? Are these habits nature or nurture?
“He always buys unnecessary things and things he already has. Such a waste of money”
“He likes to choose the cheapest option even though he may prefer something else.”
“All she does is save the money I give her. She doesn’t like to spend on anything.”
Does any of this sound familiar to you?
From a survey that I had conducted recently on teaching children about money, one of the concerns that parents facing is spending habits of their child - either not spending at all, or spending too much too fast.
Remember the day when you first decided to give some allowances to your little one.
Thinking your child is “old enough” to be responsible with the money and how proud you’ll be.
But to your surprise, his spending behavior shocks you.
If you start to compare with your other children, you realised that they have very different characters. One might be a money hoarder while the other is a big spender.
So let’s explore the two extreme ends - money hoarder (saver) and big spender.
Money Hoarder has characteristics like:
Saves all the allowances
Too afraid to spend
A scarcity mindset
Devastated with making any wrong money choices or losses
Big Spender has characteristics like:
Spends everything
Instant gratification
Enjoy today, worry tomorrow
A sense of entitlement
Someone else will solve the money problem.
Behind every child’s money behaviour lies their own past experiences and emotions.
Here are 3 simple strategies to help guide your child’s money behaviour.
Allow your child to practice making purchasing decisions.
When your child goes to the supermarket or convenience store, give him the opportunity to choose an item and pay for it.
When you are out at a café or restaurant for a family meal, allow your child to choose a dish or a drink of his choice.
Let your child practice these buying decisions. A child who has not been taught how to spend will not know how to spend wisely.
A child who has not had a chance to choose what he would like to spend on would not become confident in making purchasing decisions.
If your child is old enough to have an allowance and go out shopping on his own, do not criticize his purchases. Take each opportunity as a teachable moment to guide him on his purchases.
Similarly when you go out and buy yet another black dress or handbag, you wouldn’t like to be criticised when you get home with your purchases.
Respect your child’s choices and guide him along.
Ask useful questions to uncover underlying feelings and emotions about money
If your child is afraid of spending, a useful question to ask may be:
“What will happen when you buy this item?”
Listen to her feelings and fears. Could it be she’s afraid that when she overspends, Mum and Dad are going to have another quarrel about money?
Could it be she’s embarrassed that she cannot afford what her friends have?
Could it be she’s guilty to spend when there are other starving children out in the world?
Similarly for a big spender. A useful question to ask may be:
“What will happen if you don’t buy this item?”
Could it be she’s seeking validation to be liked and be part of the cool girls in the class?
Could it be she’s insecure that her savings might be taken away by a parent or borrowed by a sibling/friend?
When you uncover the underlying emotions, it is easier to guide your child along to change their money stories. Understand her perspective, and you will be able to help her along.
Keep your child’s allowance consistent and predictable
Money is just a tool, a system of exchange. Money is neutral, hence it is wise to avoid attaching big emotions to money.
“If you misbehave, I will cut your allowance!”
“If you get full marks on your examination, I will give you $500!”
Have you caught yourself using money like a stick or carrot?
When big emotions like fear, anger, disappointment are linked to money, these may cause a child to develop resentment or have a less than ideal relationship with money.
Keeping a child’s allowances consistent and predictable will help him feel safe around money. When money is a constant, then he can start making plans and goals on how to save and spend his allowance.
When he feels safe to think ahead, he might even start researching how to invest and grow his money.
While you wish that your child will develop into a financially responsible and balanced child, you should also be aware that your child is observing and learning from you all the time. How you behave and feel around money will affect your child’s relationship with money too. So remember, teaching your child to be good with money begins with you!
If you are interested to learn more about this topic, check out my new digital course Money Savvy Parents.