Saying "no" to your child when they want the latest clothes, shoes, and electronic gizmos can be one of the most difficult challenges a parent faces when burdened by tough financial times. According to the U.S. Bureau of Labor Statistics, the current unemployment rate is at 7.6 percent in the U.S., and parents across America continue to struggle to make ends meet after the Great Recession of 2009. Children, who might not understand the value of money at a young age, can perceive a parent constantly saying "no" to them as unfair punishment while all their friends are vacationing in different parts of the world. About 6.2 million kids in the U.S. live in a family that has been affected by unemployment, a report by Julia Isaacs, of the Urban Institute, says. The report was released by First Focus, a bipartisan Washington-based group that advocates for children. The financial woes of unemployed, underemployed and even employed parents directly impacts a child's wellbeing. The perspective of children in an economic recession go overlooked and unnoticed because of the idea that it's too complicated to explain to them why the family is on a budget. In order for your child to understand the value of money, it's important to effectively communicate with them in an open dialogue.

"I am geographically located in Beverly Hills, 90210, the land of privilege and indulgence. It is true that most kids have everything available on the market including the latest sneakers, clothes, and electronic gizmos," Dr. Fran Walfish, Psy.D., a child, couple, and family psychotherapist, told Medical Daily. The Beverly Hills psychotherapist has dealt with astronomically wealthy families under her professional care where she has witnessed parents who put their foot down by either limiting or making their kids earn the privileges of luxury items. This type of methodology helps build character and instill responsibility in kids. Walfish fully supports parents who "do not want to spoil or entitle their children," and therefore, require them to earn special privileges.

In The New York Times parenting blog, the Motherlode, the following question was posted: "What lessons about money does the poorest kid in a rich town learn?" Ron Lieber, who is currently writing a book, with the working title, The Opposite of Spoiled, based on the idea that parents should talk to their children about money earlier in life and at a greater frequency. An outpour of questions flooded the Motherlode, ranging from the impact of being the "less wealthy" child in an affluent community to relocating to a wealthier neighborhood for higher quality education in a particular school district. The parents, surrounded by financial woes that will impact their entire family, find themselves questioning if their decisions are right for their kids.

To effectively communicate the value of money to your kids, Dr. Walfish and Medical Daily have formulated some healthy ways to speak to your child during tough financial times.

1. Be Open About Financial Constraints

In order for your child to understand the value of money and to know what being on a family budget means, you have to tell them about the economic burden the family faces. When your child wants to mimic their friends and go on vacation to a beach overseas because of a photo they saw on a social networking site, it can be difficult to say no. While a dream vacation may sound tempting to you, there is no way a getaway would fit into the family budget. It is important to tell your child that local activities they partake in, such as baseball camp, swimming, or music lessons cost money which means there are some activities that simply can't be afforded.


If your child is part of a baseball camp and they want to go on a vacation, let them know that baseball camp requires money, and the money that would go towards a vacation is being dispersed toward this activity instead.

2. Free To Low-Cost Activities

Family bonding doesn't always require money or a credit card. If your child wants to go out more often, suggest going to the park or free movie nights and concerts that are nearby for the entire family. There are plenty of events that are centered on family to help increase family bonding without spending a dime. Through recommending these activities, your child will see that you don't always need money to have some fun.


Have your child be a part of this process and let them select the activities that they would like to go to. When you include a child in adult-like responsibilities, they will be more prone to do it often.

3. Moving To An Affluent Neighborhood

Many parents face the tough decision of whether or not they should have extra disposable income or move to an affluent neighborhood, where their children can get a higher quality education. "...growing up in the smallest house on the block, with the oldest car in the driveway or in a district where other kids are jetting off on beach vacations may instill a healthier perspective in the long run for children," says While the family may be "poorer" when compared to other families, the children will get a better education, even if they cannot fully comprehend the reasoning right away.


Discuss with your child the reason for the move, and check in with them to see how they feel about the high quality school district.

4. Allowance

An allowance can help children understand the value of money, especially when they realize how much they have to save up to attain what they want. When a child begins to earn money and spend it on themselves, they will feel a sense of responsibility and most importantly know the true meaning of a dollar.


If an allowance is not possible under your family's budget, implementing a point system for back-to-school items they may want can help instill understanding, says

5. Say 'No'

Parents often are faced with the difficult challenge of saying no to their child because they really want to give them all the that they ask for. However, this mode of parenting can prove to be dangerous because it can put you in greater financial debt and backfire. Dr. Walfish shared with Medical Daily, a case in which an upper-middle class family with a 10-year-old girl appeared in her office.

"The young daughter threw a major tantrum because her parents refused to buy her a designer pair of boots. They gave a gift of an exact copy of the boots that did not have the designer label. The girl had a meltdown and her parents collapsed and submitted to her demands. That is an example of what landed them in my office," she said.

Walfish believes this is symptomatic of a greater problem: parents are not able to hold or enforce their own boundaries when it comes to their children.


Speak to your child directly and don't just say no, explain the reasoning behind the no and ask them how they feel. This encourages an open dialogue between you and your child.

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