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How do I teach my son the value of money and to differentiate between a need and a want?

The problem I am facing is that he is 19 years old, not 5 years old. He is my youngest son and to be honest I do not get along well with him due to personality differences and his stubborness.

Whenever he sees his friends have something, he wants it also -- ranging from clothes, latest smartphones etc. Due to his exposure to friends from high school and university that come from high income families, he always tries to fit in and dress nicely like them, buying expensive clothing and accessories when my family is just a middle class family; we can occasionally pamper him a bit but his spending is just outrageous. He always pesters my wife for more money, her being too loving of a mother she always gives in to him and gives him additional pocket money.

Recently I had another arguement with him. He is in university now and he sees some people in his university driving cars to class (he takes public transport). He calls me up and asks me to buy him a car. His thinking is: If other families can buy their children cars to drive to university, if my parents can afford to get me a car, why can't I have a car?

I do not think that a car is necessary in a city that has a good public transport system and it is only a short ride from where he is staying to the university. I explained it to him, telling him it is spending money unnecessarily and what I have written above. He refuses to listen (showing his stubborness), getting angry on the phone and we will not be talking to each other for a few days.

This kind of situations have happened frequently whenever he does not get what he want. All the times I have denied him what he wants, is because it is for his own good and it is a want and not a need. And additionally, we are not rich as his friends are so we can't be splashing cash so freely. It fustrates me because his thinking and mindset is too "straightforward", he refuses to look at things in life from another angle.

How do I deal with him? Because I am always trying to talk some sense into him, but it seems like I am hitting a brick wall whenever I speak to him. I have four other kids and none of them caused me these problems before! I never really needed to educate them and they all know the value of money!

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Not an answer, but I'm hearing that this book is an interesting gift to young people in his situation: Your money or your life. –  Torben Gundtofte-Bruun Oct 15 '13 at 18:51
    
Tell me about it. I bought my daughter one pair of designer label sports shoes, I said to her, that's the first and last time (she is the youngest), because your brothers have had some, you now have had some and now we go back to reality. Interesting she is learning about propaganda in advertising at school, so a perfect time to illustrate my point to her on how we can better spend our money. –  user4784 Oct 16 '13 at 12:36
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There's a related question discussing How much should you buy for your child to keep up with their peers? –  Dariusz Nov 16 at 10:44

7 Answers 7

It is never too late to teach your kid where money comes from and what it is worth. Since he is a student, his opportunities to earn will be somewhat restricted. Here is what I would do

I would tell him that I don't want to have to evaluate individual requests like "Can I have a car?" or "Can I have $100 to go out for the evening?" Instead I want to establish a budget, and give him that to spend as he sees fit. (This would be easier if his allowance in the past had been a fixed amount that he had to work out how to get what he wanted with, rather than something you can always ask for more of, but what's past is past.) He will not want to make a budget; it's hard work. So you and your wife have to agree that he gets no more money until there is a budget, and you will sit with him to do one if need be.

Make sure the budget is generous and complete. Rent, tuition, books, a transit pass, groceries, clothes, mobile phone, internet, trips home to visit you from the university city, ... make sure that you cover everything he might spend money on, even going out drinking.

Either pay his tuition and rent directly, or have a way to know they have been paid, such as knowing the password for his online banking so you can check. I wouldn't normally recommend that for grown children (I don't do it for mine), but I think in your case a little verification is important. Give him the money he needs each month, or perhaps every two weeks. Check in with him regularly: "is the budget enough? Are you able to get everything you need?" but do not comment on what he is or isn't spending. If he wants to buy clothes with this month's money and there won't be money for restaurants, or he wants to live in the clothes he has and go out drinking a lot, let him make those choices and learn how to use a limited pool of money to try to get all he needs. He should feel that you care, and want him to be looked after, but not that you are a "walking wallet" or his own personal ATM.

If he comes back and says the budget isn't enough, that he budgeted X a month for restaurants and has spent 3X already this week, here is where it gets hard. You have to tell him that the budget is fixed, he had a chance when making it with you to accurately estimate restaurant use, and now he will just have to economize elsewhere. Expect pushback. But it's much easier to discuss "raising a budget from A a month to B a month" than "giving you a car." Don't hesitate to say "we can't afford that" if it is the truth. Children often think their families are rich (not knowing about the costs of mortages, insurance, new furnaces, taxes etc), but if we can't afford something we can't afford it and that's that.


Also, try to help him observe the world more accurately, using the tradeoff information he is learning about his own budget.

  • that friend who always wears the nicest clothes, whose clothes your child now wants, does that friend drive a great car? or eat in nice restaurants all the time?
  • that other friend with the amazing car, how are that friend's clothes?
  • and the one who eats at a different 5 star restaurant every night, what does that friend drive?

With a little perspective your son may realize that he wants everything all his friends have, but none of his friends actually have everything all his friends have. The same thing happens for adults with Facebook updates: one friend is on an amazing vacation, one is at a swim meet or something where their kid is getting medals, one just got promoted, one made a beautiful pie, one lost 50 pounds, one learned another language - but nobody did all those things and you can't measure yourself against that aggregate. (If you have the right kind of Facebook feed, show him that to make the point.)

Chances are you can't have this part of the conversation until your child has been trying to live with the budget for a while and making some of the tradeoffs. And of course it will be torpedoed if he has a millionaire friend who does in fact do all of those things. Let's hope that's not the case for your child.


Look into the recent past to see if you sometimes "cry wolf." Have you or your wife said no, even said something was impossible and couldn't be done, and then in the end done it? If so, you will have trained him to be persistent and keep going until you change your mind. You will need to address this with him directly. "I know, usually your mother will eventually give you what you want, but we are at the absolute ceiling of what we can spend on you, there is no more." And then for heaven's sake, stick to it. You aren't doing him any favours teaching him there are no limits and whining and sulking will always get you what you want.

Give him the tools he needs to be good with money. It's part of making a grownup.

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+1 for the comments on adults and the facebook feed. –  abhi Mar 25 at 18:53
    
Answered October '13... less than one year later is today... OP said their son was 19... so logically it's impossible that he is 21 even now. And you condoned his parents giving him a budget to go out drinking! Law is law, but more importantly if he doesn't understand the concept of money at this point in his life I don't think he should be allowed to spend money on alcohol, regardless of how responsible he is even being under the age of 21. +1 for the detailed answer though! –  Chris Cirefice May 23 at 16:43
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@ChrisCirefice not everyone lives in the USA. Where I live, a 19 year old can legally go out drinking. –  Chrys May 24 at 14:32
    
@Chrys I was joking... America style. I know that most of Europe is 19+ for the legal drinking age. –  Chris Cirefice May 24 at 20:21

At 19, don't be too sure the mindset he presents to you regarding material entitlement is one he actually believes in. He may simply being trying to manipulate you into giving him what he wants.

It sounds like he pushes for these things because it works (at least sometimes). Even if you haven't ever given in to his requests for money, fancy clothes, or other luxuries, your wife has.

Unfortunately, I'm not sure there's anything you can say to convince him to start learning the value of money. He's going to have to learn those lessons the hard way, sooner or later.

It is in his own best interest (and possibly yours, since otherwise you run the risk of him staying dependant upon you far longer than necessary) to learn this as soon as possible.

The first step is to discuss this with your wife.

Lay out your concerns about your son's inability to manage finances and spending responsibly. Point out that giving in to his requests for supplemental money has done him no favors (preferably without coming across as blaming your wife! Share ownership of this with her).

If the two of you agree that there is a problem, you can start strategizing on how to best approach it.

My personal suggestion would be to cut him off from all non-essential expenses. This sounds harsh, but it will force him to find a job to give him enough money to pay for incidental and entertainment expenses. Its a harsh lesson, but at 19, it may be just what he needs to drive home just how hard it can be to get by.

If you want, and your finances allow it, you can soften the blow without reducing the impact of the lesson by agreeing to partially, or even fully, match any earnings he gets from a job. Tell him to send you his paycheck stubs, and you'll send him whatever portion of it you're willing to match. This will increase his incentive to find a real job, without forcing him to devote too much of his time towards working (and thus avoiding the excuse that working is hindering his ability to study).

Alternately, you can work out a full budget for him, that identifies and covers basic expenses (tuition, room & board, food, textbooks and other school supplies, public transportation, etc.), plus incidentals (e.g. 2 meals out at a restaurant a week, $50 a week for entertainment, etc.).

The important thing is that you stick to whatever you and your wife agree on. I have no doubt that your son will not handle this well, but let's put it in perspective: he doesn't handle you not giving him a free car well, so either way is likely to end in him being upset.

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Amen for cutting off. –  monsto Oct 16 '13 at 9:31
    
This is what we have done with our kids from the age of 5. They get an allowance (pocket money) and if they want something big, then they save the allowance until they can afford it, eg my eldest wanted a PSVita - so he saved for 2 years until he could afford it, doing extra odd jobs for some extra money. So they already understand the value of money, and its connection with effort. –  Rory Alsop Mar 20 at 14:28

Let me guess: whenever you try to talk sense, the conversation QUICKLY winds up elsewhere... either about his 'friends', or it degenerates into arguing about nothing, or any number of things, but it winds up ending on a subject other than what you started on.

If this is the case, then it is willful ignorance on his part. In other words, some part of him knows that it's untenable, but he continues to reach for it anyway.

So turn the tables of manipulation.

"Have a seat. We are going to talk about money. If you do not participate reasonably in the discussion, then I'm cutting you off completely."

Of course, modify the threat to be as far as you're willing to go... but in order for it to be effective, it has to have shock value. Even so, the point isn't the threat, the point is just to get him to the table for a conversation.

So once you have his attention, you can have a discussion. I'm not going to pretend to know what you can afford to give him or how much he needs to get his own job so I'm going to stay away from that. My main suggestion is to be engaging, not preaching. It's a conversation, not a seminar. Ask him what he thinks, if he has thoughts, if he understands. He has to know that you're in it for him and his future, not just for keeping your own wallet fat. And who knows... you may learn something about his motivations.

Or... if he fails to participate (and here's the hardest part of this entire conversation), you must be firm with the threat that you made. You will either eventually have the conversation or he'll figure out how to swim on his own.

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19 years old ! This "kid" really needs a reality check. Some suggestions -

  1. Try to find out why he needs more. To impress girls, to fit in with the rich crowd etc. ? If those are the reasons behind his behavior, then explain why he should not spend money on those things.

  2. Tell him to get a job as short-term experiment and see how money does not literally grow on trees. Teach him the importance of living within his means. EDIT - Make this point 1.

  3. Give examples of how poor people live and remind him to be grateful for what he has. At the same time, tell him that if he wants more in life, then he HAS to work for it. Make ti clear that you can provide him the means to attain financial independence, but you can't be his ATM forever.

As an aside, try to have these discussions when you both are calm and fine. Otherwise, this discussion could turn bitter.

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I agreed with many of the points offered with the most upvoted answers, but I felt that they all could include something more.

I believe that having a detailed budget is the biggest aide in becoming financially independent and stable. You need to know how much many you have coming in, and how much money you have going out.

Other answers have suggested that you have your child create their own budget. I do believe this is a very important skill to teach your children as soon as you can. I also believe it's important to show ideal behavior, and not just ask for it, whenever possible.

In this case, I recommend having your own budget, and letting your child see what it looks like to manage household income and expenses.

When a child is vaguely aware that you make X amount of money, they may have unrealistic expectations as to where that money can go. But if they see that, as parents, you have to budget for:

  • Rent/mortgage
  • Taxes
  • Loan payments
  • Insurances Groceries
  • Utilities/Internet/TV
  • Gas/petrol
  • Clothing
  • Toiletries/household supplies
  • Home & vehicle repairs/maintenance
  • Entertainment for the family
  • Education-related expenses Savings
  • Medicine & medical care
  • Membership costs

Then they may be more understanding of why you don't just buy them all the things that they want. Even if you have a lot of "leftover" money every month, it doesn't mean that it's free money, because you also have to plan for "what if" expenses, such as flat tires and illness.

If your child never actually sees the true cost of living, it can be hard to expect them to appreciate all the expenses that come up. They may see you as a font of cash that just conveniently "dries up" when you don't want to purchase them something.

In the US there seems to be a heavy stigma around talking about how much money you make. While this is understandable when speaking interacting in the workplace, I don't feel that it makes much sense inside the home. Being open with your children about your current income, and what it took to get to that point, can also help give them a practical understanding of the value of salaries in a career. That is to say, they may be better equipped to translate that salary into its actual purchasing power, rather than just a price tag.

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I think many answers here are good, but take a different approach than I would. They all presume that spending money to impress girls or fit in is necessarily, and fundamentally, wrong, and there are valid arguments against that. I think the issue to be addressed here is more one of agency.

The Situation

First, you do not necessarily need your child to not spend money on these things, but you need your child to understand that you will not spend your money on these things. That is establishing your agency. This is what I would call the most important, and most fundamental, financial lesson. That in a capitalistic society agency is often tied to money (whether that's right or not is another question).

He is over a year into adulthood and, unless we are missing information, fully capable of supporting his own basic needs if necessary. Many college students work part (or even full) time to put themselves through school, so your support is not a matter of survival. I think this is important to discuss with your partner. As is the fact that loving someone involves doing what is best for them and not what is most comfortable, though I agree with previous answers that this discussion should be non-confrontational and without blame (or with shared blame). You must both be on the same page or nothing you do will be successful.

The Conversation

Sit your son down together and present a united front at all times. Explain that you are happy to help him with some of his necessities. Lay out what you are currently willing to pay for and establish a budget. In this phase I would recommend that you have a budget of necessities only (rent, tuition, groceries, maybe basic clothing). Explain that he is welcome to spend any money he earns on his own any way he wants. Be supportive and offer to help him every step of the way in finding a job. I especially like an earlier suggestion of offering earnings-match.

During that first phase be explicit about agency. If he is using your money then you get to decide how it is spent. If he is using his money then he gets to decide how it is spent (on anything he wants, without any nagging or negative comments from parents...which is something you must be willing to do). This is an important point. We began using this with our pre-teen daughters and it worked very well to help them see money as a positive thing (something that gives agency) instead of a negative thing (something that limits). Your situation is a little different as your son has already established certain associations with money in the latter sense, but I think this could still help to provide a positive counter-point. Everyone wants control over their own life; help him see this as a way to gain something he doesn't have.

As a second part of this conversation, explain that the amount that you provide to him will decrease by 30% per year (or whatever number you feel is tenable). Explain why you are doing this. He must learn to support himself. You're willing to help by providing assistance as he slowly weans off of your support. Depending on his point of view, and your relationship, you could make a point that any support you give is no longer required of you and is, in fact, a favor. Were my 19 year old to act like any money I gave them was anything other than a treasured gift, they would not receive it, but every parent/child relationship is different. If you want to continue to support him through school, then instead tell him that your support will decrease by 10% per month beginning the third month after he graduates, or something similar. Whatever your plan is, make sure it is clearly communicated so he has expectations and can plan.

Your son will be angry. Your son will likely yell and likely storm off. Prepare for this. Do not show anger; maintain a position of love and support, as if you were forcing a baby to swallow a pill they needed but did not want. If he storms off let him cool down a bit, but in your very next interaction pick up the conversation exactly where you left off. If he asks good questions (as opposed to rhetorical ones out of anger) answer them, but immediately return to the topic. Don't get sidetracked into a tangential point. Most importantly, if he refuses to have the conversation go through with the plan exactly as you would have otherwise. The conversation is not to hammer out an agreement, but rather notification to him of what you have already decided to do. He will come back to get that explanation eventually.

Again, never disagree with your partner during this conversation. The moment you show the slightest crack in that united front he will find a way to drive a chisel in there and pry it into a chasm. It's just what kids are good at.

Other Points

Feeling guilty, or like you're failing him, or like your bad parents, or like you're putting him in danger are all normal feelings. They will not be comfortable. But you are doing no favors by teaching him to be financially reliant on you for the rest of his life. Uncomfortable as it is, teaching him self-sufficiency is the only real option.

All children are different. All parents are different. All parent/child relationships are different. How you handle this will have serious repercussions both in his life and in your relationship with him. Don't try to follow any advice given in any answer word for word; take it an modify it to fit your situation.

As a parent I know how easy it is to always see our children as our 'little kids'. But he is an adult now and clearly has not yet learned to act like one in terms of finances. This puts him at a disadvantage, and if he is going to compete and succeed in the world he needs to not just start doing as well as his peers, but going above and beyond so that he can catch up.

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Now I do self-emplyment IT jobs over the country.

On my 19 I was already living on my own in another city and planning overseas work which I did for couple of months.

In High School I had to earn my own money for parties, clothes etc.

In my early years I had to save all money from relatives to buy a toy.

Tell your son he's a sisy and boot him out of house to make him earn his living or just stop giving him money. Why is it a problem?

PS In selfish way I wish have parent like he does. But would I be here where am now?

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Going around, calling your son a sissy probably won't help. This is not good advice. –  ChristopherW Mar 21 at 4:18
    
So honest opinion from not aprent is not welcome here? –  Ultra Mar 21 at 9:48
    
I empathize. At 16 I bought a sports car with my own money. By 19 I had a full time job and went to school full time. However, a good parent wants to take actions that have the highest probability of an optimal outcome. So no, an honest opinion may not be the best approach. That's what's so hard about being a good parent; sometimes you need to hold back what you want to say in order to do the most good. –  Nicholas Sep 8 at 12:19

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