Personal Finance

Parents Dole Out Too Much Cash To Their Kids

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Photo by: Pink Sherbet Photography

Even though many kids receive little education about managing their finances, parents often give in to their kids when they ask for money, according to a recent poll.

In fact, parents are doling out money more freely than before, according to survey by the Northwestern Mutual Foundation.

Of those polled, a greater number of people in younger age groups said they always received extra money beyond their allowance when they wanted it. About 12 percent of those aged 18 to 45 got extra money when they were kids, while 8 percent of those aged 46 to 59 got extra money when they asked for it.

But giving out money too easily can actually hurt more than it can help if kids don’t get the right money management education early on.

“We’re seeing a lot more leniency among parents today when it comes to providing extra money to their kids when they ask for it, and this easy money can create bad habits over time,” says Northwestern Mutual director Janie Schiltz.

“Being disciplined with money early on is key to practicing good money habits later in life,” Schiltz added. “Parents who say no—and explain why—will help their children better understand budgeting and prioritizing.”

And kids aren’t necessarily using that extra money for things they need anyway. The main reason kids ask for it is to pay for tickets to a movie, concert or sporting event, for food, or to buy a toy, game or phone, the survey found.

Meanwhile, 15 percent of those surveyed said they spent their extra money for school or other educational purposes and 1 percent used it for charity.

Interestingly, 47 percent of responders aged 60 or older used the money for education.

“As parents, we need to be teaching our kids about responsible spending. This doesn’t mean never buying tickets or new toys. But it does mean curbing spontaneous spending behavior and helping kids understand the real value of each dollar, what they need to do to earn it and how to prioritize using it for spending, saving or investing,” Schiltz says.

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