A version of this article originally appeared on Learnvest.com.
No matter where you are, it seems like there is something for your child to want. At the mall, it’s a video game or $.50 rides that last 45 seconds; at the zoo, an adorable stuffed animal; at the supermarket checkout, a pack of glitter pens; at the museum gift shop (which you have to walk through to exit the building), a cool puzzle.
If your child is constantly asking, “Can I have that?” and you’re not sure when to say yes and when to say no, we have a solution: letting kids make their own decisions and living with the consequences.
1. Provide for Needs, but Not Wants
According to Ron Lieber, the New York Times “Your Money” columnist who is currently working on a book called “The Opposite of Spoiled,” one approach, starting around kindergarten, is to buy your kids presents only at holidays and birthdays, and have children pay for everything else.
“The family needs to have a very specific and ongoing conversation about the difference between needs and wants,” Lieber explains, acknowledging that many things exist on a continuum. For example, many parents feel that books (within reason) are a need, not a want. Similarly, kids need a certain amount of clothing each season.
“Every family has to draw the line from when you cross over from want to need. These discussions become not just educational but wildly entertaining,” Lieber adds.
2. Use Allowance as a Teaching Tool
Once you establish this strategy as a framework, allowance can be your tool to empower kids to make their own decisions. How much to give will be based on your child’s age, your household’s financial situation and your family’s definition of needs and wants. (Here’s allowance 101, with suggestions for how much to give, and at what age.)
Lieber and his wife give their 6-year-old $3 each week, one dollar of which is designated for charity, one which goes into a savings jar and can’t be spent right away, and the last of which their daughter can spend any way she chooses.
Now comes the tricky part—staying out of it if your child wants to use his money for something you think is frivolous. “It’s okay to ask in the moment, ‘Is this a purchase you really want to make?’ but you have to hold your tongue and let them accumulate small piles of junk if that is important to them,” says Lieber. “We are dealing with [younger kids] who don’t have that much impulse control.”
Kids won’t become fully formed financial beings within weeks or months, but by giving them the power to make their own decisions and experiment with that power, they will become more financially savvy. “There is nothing like real dollars in the real world to teach real lessons,” Lieber says.