Since I write about the impact finances have on families, I often have friends and colleagues confide about financial issues they face at home. One friend recently shared that he and his wife frequently bicker about spending on their kids. More specifically–her spending. In his opinion, she spoils their two young children, splurging on toys, clothes and birthday gifts for their friends. “She buys them whatever they want,” he explained, “and I don’t think it’s necessary.”
Most arguments about finances have two sides and I suspected this might be the case for my friend. Often, our spending habits (on kids or other things) are a reflection of our values and priorities – which aren’t always perfectly aligned between family members. Arguments about money are a common source of discord among couples in the United States. According to a new survey by the American Institute of CPAs (AICPA), money fights prompt an average of three arguments each month – making it the most volatile topic for spouses.
The escalating cost of raising kids [PDF], coupled with a still-difficult economy, makes it more likely that arguments about kid-related expenses will pop up. The most frequent money fights cited in the AICPA survey revolved around “needs versus wants” (58% reported this as the most common reason for a spat), unexpected expenses (49%) and insufficient savings (32%) – all of which can be exacerbated in families with children.
Frequently, marital conflict about money can be attributed to a failure to communicate about finances. More than half of the AICPA survey respondents said they don’t set aside time to talk about money before disputes arise. If you and your spouse often have disagreements about spending on the kids, consider exploring the following topics:
Talk about your money values. Money habits and values are typically shaped during childhood. So, if your parents were liberal with money, you may have a similar approach. But if you grew up in a frugal environment, or one in which you worked for the things you wanted, your perspective about spending on your kids may be more conservative. I’ve even seen adults who disagreed with their parents’ approach and intentionally do the opposite in their own parenting. Deeply held views about what is right and wrong financially can perplex a partner without proper context. Regardless of how your values were formed, it’s important to discuss your own financial values and philosophy around childrearing with your spouse or partner. You may not agree, but you’ll likely become more empathetic if you know where the other person is coming from.
Discuss how much stuff costs. In many households, one parent takes responsibility for the children’s everyday expenses and therefore may be more in tune with how much things truly cost. If you’re that parent, you may be mystified or defensive when your spouse or partner questions your spending. If the other parent hasn’t shopped for the kids lately (or ever), he or she might be shocked to discover how much things cost. Consider inviting them on a shopping trip where you can discuss alternative choices together and save receipts to help inform your shared budget. Sharing this information with them may also help him or her to make informed decisions when he or she does run an errand for your kids.
Agree on your children’s needs and wants. Be honest with each other about what you spend and why when it comes to your children’s needs. Do you buy luxury versions of items when there is a less expensive choice? Or splurge on birthday gifts or clothing to impress others? If an element of status or prestige is something you value, make sure you’re consciously aware of this and how it might impact your relationship with your spouse and your children. It is also important to be in tune with your kids’ needs and wants. Sometimes having or doing the “in” thing is important to your child feeling accepted, so those expenses are worthy of discussion. At other times, that must-have item may really be absolutely ridiculous (adding to a stack of video games or a closet full of dolls). It is up to you to know where to draw the line, but make sure you and your spouse or partner are both on the same page about what the limits are.
Agree on how kids’ expenses fit in to the family’s financial plan. Look at your overall financial plan and household budget and determine how much discretionary spending (after the fixed essentials like housing, basic clothing and food) you have for child-related items like private school tuition, activities, allowances, entertainment and gifts. It may take time, but try to prioritize and align on what you’ll spend in each category. Then, stick to the agreed upon budget and consult one another before you purchase something outside of it.
Regardless of your income, raising children is costly and requires constant decision-making – financial and otherwise. Since spending on your kids is a reflection of your own values and priorities, frequent communication with your spouse will help you navigate this ever-changing landscape.
De Baca is vice president of wealth strategies at Ameriprise Financial.