The Value of a Dollar ~Part 2, Budgeting~

Wait!  While this article is good alone, it’s intended to be read in order from The Value of a Dollar series. Start with Part 1 here. 

Legos, Legos EVERYWHERE!  Four children big enough for Legos x birthdays x Christmas x unbirthday presents = exponentially more legos than you could possibly imagine!  Legos in boxes, Legos in bins, Legos in backpacks and Legos in my vacuum cleaner!

Why, then, did I wake up to this request one Saturday morning, “Mom?  Can we go on pick-a-brick and buy some Legos?”

They want more Lego swords, more hair, and more little hinges.  More guys, dogs and horses.  Really, they just want more.

If my goal for my children is financial maturity, now is the time to teach the difference between needs and wants, about goal-setting and entitlement.

Needs vs wants can be a fun lesson to cover.  It’s certainly easy once you help the children (and yourself!) look at life honestly.  Here’s a start:

jeans: need

Legos: want

iPod: want

M&M’s for kids: want

dark chocolate for Mom: need!

Try quizzing by grabbing random items off WalMart’s shelves and asking, “need or want?”  Expect a giggly answer when you pick up a giant pillow with a screen-printed wrestler, tanning spray and corn-on-the-cob holders.  They’ll be surprised at how little in such a large store is actually a need.

Once your kids catch on, they may call you out when you toss in another bottle of red nail polish or a crepe-maker that’s “such a great deal”.  Remember- the financial lifestyle you model is what your children will learn from!

Of course, not every want is bad… and that’s where the next teaching point comes in.  Buy wants within your budget selectively.  Remind them of Proverbs 21:20, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.”

Dave Ramsey classifies money in three categories: spend, save, give.  He challenges readers to tithe first, pay yourself next (save) and then everything else.  When the children receive money, whether as a gift or payment, teach them to immediately separate it into spend, save and give.  Give the first 10% at church, save the next portion, what’s left is spending money.

Tithe.  Save.  Then spend.

So what if your sweetie wants a new iPod?  It comes out of spending money, but she doesn’t have enough!  Setting goals is imperative to enjoying life on a budget.  She needs to save her spending money for this splurge.  She may also want bracelets and lip gloss- help her realize how this purchase affects her goal of the iPod.

That same daughter may assume you are going to buy her jewelry to match her new outfits.  It may be well within your means to do so, and sometimes your heart is to bless her with those things.  In that case, go for it!  But if she’s demanding, assuming she deserves it or pouting to get it, recognize the symptoms of entitlement.

“You can smell entitlement on a kid a mile away,” Ramsey says.  Webster’s dictionary says entitlement is belief that one is deserving of certain privileges.  Ramsey’s advice to children (and adults)?  “You’re not entitled to squat!  Food on the table, a roof over your head… sure.”  This takes us full-circle to needs vs. wants.

Whether it’s $1 gum, $5 Legos or a splurge, teach your children to purchase wisely.

This is part 2 of a 3 part series on money originally published in The Creekline.  Continue to part 3 here.