Letting Kids Make Financial Decisions - My Son and His Birthday Finances

Letting kids make financial decisions is a valuable skill that is best learned early. As parents, we work hard to teach our kids how to become successful adults by giving them age-appropriate situations that will allow them to learn to deal with what life will inevitably offer. We play board games that teach about losing and winning, we get them pets and have conversations about life and death, we send them to school where they deal with authority and make choices when we aren’t around, we let them pour milk from a full gallon jug and cringe as we wait for it to be too heavy and spill! However, many kids are not often given the opportunity to make financial decisions until they are teenagers or even adults. Raising financially capable children is an important part of being a successful parent. There are many situations in life that we can use to provide valuable financial experience for our kids. Let me share with you one example about my son and his birthday party.

My 11-year-old son recently had his birthday. As I began planning how we’d celebrate, he told me that he wanted an ice cream cake from Baskin Robbins. He knows how delicious they are because I had one for my birthday and I was nice enough to share a bite or two with the rest of the family. What my son doesn’t know is that those types of cakes cost a lot more than store-bought sheet cakes, and really a lot more than me making the cake at home. At (almost) 11 years old, my son is plenty capable at understanding finances and making his own decisions, so I explained to him the situation. I told him, “You get $75 for your birthday. This includes your present, cake, and an activity. You can spend the money however you choose. Now let me show you how much the things cost that you want to do.” I made a list for him with all the activities and ideas that he’d mentioned to me. It went something like this.

Cake – Ice Cream Cake $35, store-bought cake $12, or homemade cake $3
Activity – Golf with 2 friends $35, laser tag with friends $30, bowling with family & friends $40, or hang out at home $0
Present – Mom & Dad surprise $50 or Shopping at anywhere you want $? (extra money leftover)

Guess who ended up baking a homemade cake? It didn’t take him long to decide the ice cream cake wasn’t worth it to him. He’d much rather spend the extra money at the LEGO store and buy something that will last a lot longer than cake. He chose to go golfing with a couple friends ($35), have homemade cake ($3), and spend the rest of the money at the LEGO store ($37) picking his own present. Smart kid.

Situations like this birthday conversation come up in many circumstances in kids lives, we just need to be aware of them. I could have ordered the ice cream cake, took him and his friends golfing, and then spent $50 on a big present. It would have cost me around $120 and have been a great day, but involving my son and letting him make decisions is more valuable than a new toy or a delicious cake. There are plenty of opportunities to spoil are kids and not make them “worry” about the money. I highly recommend taking kids on awesome vacations, surprising them on Christmas morning with something they never thought they’d get, and having big parties with lots of friends. But make sure you balance these events by giving them times when they are empowered to make their own decisions, to learn that they can’t have everything just because they want it or think they deserve it or because it’s their birthday. This knowledge will be a gift to them for the rest of their lives.

Kids might not always make the best decisions, but that’s okay. As adults we don’t always make the best decisions either! However, it’s much better to learn the consequences while you’re young and the stakes aren’t so high. Letting kids make financial decisions can be tough, but it’s our job to provide these opportunities for them so they can become financially successful adults.

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