Even if your child doesn’t ask for much, there likely will come a point when he asks you for something that’s a little out of your reach financially. When this happens, it’s not the best route to jump and say you can’t afford the product or service. Other options are available and offer good teaching opportunities.
Why You Shouldn’t Say “We Can’t Afford That”
Even though you always want to be honest when it comes to money, you generally shouldn’t tell your child you cannot afford something. Doing so has a very present-based focus. It describes only what your situation is like in the moment. A week, a month or a year down the road, things could be different.
Another reason you shouldn’t say “we can’t afford that” is because kids tend to exaggerate mentally. If you tell them something is completely out of reach in this way, they can make the leap to being one step away from homelessness. They can end up worrying unnecessarily, which even can have negative influences on their sleep and health.
What to Say Instead
If you genuinely don’t have the money for something you child is craving, you have three main options. The first is to suggest that he add the item to his wish list. The wish list can be very general, or it can be for a specific event, such as a birthday or Christmas. This gives you the chance to save up a little more for the item. You get the added benefit of teaching your kid about delayed gratification here, as well.
Alternately, you can suggest that he save up to cover some or all of the cost of the item, which, like the wish list, teaches delayed gratification. The money he saves can come from gifts, general allowance, chores or other jobs. The big benefit of this option is that, once he has saved enough money to make the purchase, he can feel pride in having managed his money well enough to handle the transaction. Even if he saves the entire amount, you can provide solid support by helping him calculate how much is a reasonable amount to save, how long it will be before he reaches his goal and finding ways for him to earn. Offering positive encouragement along the way will help him stay focused on his goal, as well.
A third and final option is for you to offer an alternative to what your child wants. For instance, if your child wants to go to the movies with friends all the time, you could suggest that he rent a film from a video store, self-serve video box or online streaming service, and that he host his buddies at your house. This choice holds a good opportunity to talk about opportunity costs, value or feature assessment, general cost comparison, keeping up with the Joneses and even brand loyalty and marketing. Your child might protest at first if he has his heart set on something very specific, but he likely will warm up to the other choices if you clearly present all their benefits.
Telling your child that you can’t afford something isn’t ideal because it has a very here-and-now approach to your money. You need to teach your child to look past what your present circumstances are, showing him what they could be and how to get there. You also don’t want your child to worry unnecessarily. If you don’t have the funds to meet your child’s requests, your three main options are to suggest alternatives, have him save or put the item on the wish list. Each option holds its own benefits in terms of financial lessons you could use it to teach, so which one you choose really just depends on what you need or want to work on.