How to Unspoil Your Kid

By FOXBusiness

It’s no question the economy is wreaking havoc on family budgets across the country, forcing many households to do more with less. Over borrowing and spending was a main factor for triggering the 2008 Great Recession and now families are being forced to re-evaluate their budgets and spending habits.

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The cutback on discretionary spending and downsizing can be particularly hard on children that have grown accustomed to a certain lifestyle. Children who are used to getting everything they asked for can have a hard time adjusting to more frugal times, but experts say it’s possible to unspoil children and make them more budget conscious.

“Kids don’t come out of the womb spoiled—we make them that way,” says Linda DiProperzio,  a parenting writer and mom of two. “Instead of feeling guilty, you can look at this change as a great lesson for your child in spending, saving and sticking to a budget.”

According to BabyCenter’s annual U.S. Cost of Raising a Child report, 76% of moms report their families were concerned about money and close to one in five said the economy has negatively impacted their family’s financial situation.

“This really is an issue for the majority of parents,” says BabyCenter’s Global Editor in Chief, Linda Murray. “Sixty-five percent [of survey respondents] are cutting back discretionary spending, eating out and vacations.”

Parents’ approach to unspoiling their kid should depend on their age. For older kids, parenting experts say it’s important to make them part of the solution.

“You’ve got to sit down and have a crucial conversation with your kids,” says Gregory Downing, author of Entrepreneur Unleashed: Wealth to Stand the Test of Time. “Explain what’s going on in the economy, what’s going on in the household and this is what we have to do now.”

Once children know the problem, Downing suggests making them part of the solution. Detail all their expenses and give them the opportunity to identify any areas that can be reduced or eliminated. Parents also need to lead by example, and show how they are cutting back whether it’s cancelling cable or bringing lunch every day to work.

If a child wants an expensive pair of jeans or a new bike, parents should help him or her set up a savings goal so they will be able to purchase it on their own. Experts suggest creating a plan to obtain the expensive item either by doing chores, selling old items or getting a part time job. “Sure, it’s easier if mom and dad buy it for them, but it will mean more if they actually earn it,” says DiProperzio.

For younger children not able to understand the concept of cutting back, but are used to getting a new toy every time they’re in a store, the unspoiling process is going to take more work and time. Experts advice cutting children off cold turkey, and instead set performance-based rewards for getting new toys.

“You have to teach them how to work for what they want,” says Murray of BabyCenter. For instance, parents can employ a sticker chart as incentive to get new things. Each time they complete a positive action like clean up toys, set the table or read/listen to three bookers, they get a sticker. Every seven stickers adds up to a new toy.

Another option for cash-strapped parents is to trade for toys and visit swaps and yard sales. If a child wants a new toy, set a rule that he or she has to trade an old one. The old toy could go to a sibling or be donated. This teaches a child you have to give in order to get and avoid clutter.

Parents might hold the most power in a single word: no. Saying no and meaning is an effective way to rein in the overspending with kids. It might result in a tantrum or incessant nagging, but if parents hold out, children will get the message.

“Once you give in to the tantrum, you’ve lost the war. So when you say no to something, be prepared to live by those words and walk away from the screaming child if necessary,” says DiProperzio.