Here’s What Never Saying ‘No’ to Your Kids Does to Your Savings
Written by
Cindy Lamothe
Edited by
Amber Barkley
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Saying “no” to kids’ demands is a habit every good parent knows they should reinforce. But in real time — that can be tricky. The problem is that not having limits can pose grave risk to your savings and overall finances.
“You can’t blame kids for wanting things,” said Melanie Musson, finance expert with Insurance Providers. “You want things. But when it comes to yourself, you’ve probably learned that you can’t get everything you want, and you have to prioritize and fit desires into your budget.
“It’s your responsibility to teach your kids discretion when fulfilling desires. If you don’t, you’ll spend more than you should. That means you’ll have less available to build wealth and prepare for your future.”
Here’s what never saying ‘no’ to your kids is doing to your savings — and what you can do about it.
It Creates Long-Term Financial Damage Beyond Your Bank Account
Constantly giving in to your children’s wants creates long-term financial damage beyond your bank account, said Gagan Saini, CEO of We Buy Houses in Central Valley.
“When parents never say ‘no,’ they sacrifice their retirement security by diverting thousands from savings accounts into unnecessary purchases, while teaching children destructive money habits that will follow them into adulthood — a financial disaster that unfolds in slow motion over decades,” he explained.
It Creates a Dangerous Cycle of Credit Card Debt
Saini has worked with numerous families who have accumulated credit card debt trying to fulfill their children’s every desire.
“Parents who can’t say ‘no’ often find themselves financing everything from the latest electronics to extravagant birthday parties on credit cards, creating a dangerous cycle where they’re paying 18% to 24% interest on purchases their children have long forgotten about or outgrown.”
One person he counseled had accumulated over $30,000 in high-interest debt from just two years of unchecked spending on their kids.
You Fail To Invest In Your Future — And Theirs
“Instead of investing in a 529 Plan, you buy your child the things they want,” said Musson.
And instead of preparing for your retirement, you spend money on your child. Then, when your child goes to college, they’ll be more likely to have to take out student loans.
“And when you retire, you’re more likely to have to depend on your child for support,” she added.
How To Combat This Tendency
Even if you’ve already established the pattern of buying your kids whatever they want, it’s not too late to correct it.
Set Clear Financial Boundaries
Setting clear financial boundaries benefits both parents and children in profound ways, said Saini. “The most financially secure families I work with implement consistent rules around spending — they use allowances to teach budgeting skills, involve kids in age-appropriate financial discussions and aren’t afraid to explain why certain purchases aren’t possible right now.”
He said these same children typically grow into adults who manage money responsibly, while their parents enjoy financial security in retirement.
Provide Alternatives Rather Than Outright Denials
According to Saini, providing alternatives instead of outright denials creates financially savvy kids without breaking your budget.
“Smart parents redirect requests by offering choices within their budget, teaching delayed gratification through saving for special items and emphasizing experiences over material possessions,” he said.
These strategies, he explained, preserve parental finances while instilling crucial money management skills.
Help Your Kids Make Money
Musson emphasized the importance of helping your child find ways to earn money. “From babysitting to shoveling snow, there are ways kids can make money and learn the value of the things they want to buy.”
The point is to create a mindset around money that is balanced and also fosters growth. Having them earn their own money teaches both independence and a greater appreciation for what they spend on.
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