So she’s at the store and your daughter sees “the most perfect t-shirt ever!!!! Seriously, they never have this shirt in my size and it’s the very last one!!!”
The problem is, your daughter is broke. She already used her allowance and birthday money for CDs, lattes and cool stickers for her laptop. She’s begging you for a loan or an advance on her allowance.
Sound familiar? And if so, what’s your reply strategy? Allow us to offer a few choices.
Option 1: “No Way, Kiddo.”
It happens to all of us at some point, and it will happen to your child, too. Your teen happily spends all of her discretionary cash, then runs into a great retail deal she didn’t expect. She requests an advance from the Parental Unit Bank. Your response to your kid’s loan request might depend a bit on 1) generally how responsible your kid is with money and 2) how new they are to allowances or having their own spending money.
Food for thought: Advancing your child money really is teaching them to go into debt. They don’t have the money to buy the coveted item, but they found a place to borrow it (you). They’re buying now, paying later. Sounds a bit like a credit card transaction, doesn’t it?
If you haven’t yet seen this hilarious letter from a dad turning down his 6-year-old son’s loan request, be sure check it out.
Option 2: “Let’s Make a Deal.”
Maybe that T-shirt really is a one-of-a-kind item that your child has wanted for months. If so, and you know your child is pretty financially responsible, you could forward the money to their account and greenlight the purchase.
Food for thought: Your child may need to have some “skin in the game.” Savvy parents may require their kiddo to do some extra chores in return for the money. They may also take possession of the cool t-shirt (sort of like a Parent Layaway Plan) until those chores are done satisfactorily. If the kid doesn’t do the work, or repeatedly does it sloppily, the shirt (or whatever item) goes back to the store.
A slightly different layaway option: You keep the item until your child pays you with their next allowance.
Option 3: “This Warrants An Exception.”
There are times when you might be a little less hardline. For instance, if your kid has the money at home—just not with them at the store—it’s probably reasonable to advance them the funds until they get home and pay you back.
Another example: A future event needs to be paid for today. For instance, your teen might have a chance to buy concert tickets, but the deadline is this Friday. Your kid can’t afford the tickets this week but absolutely can pay you back between now and concert night three months from now. As long as your child repays you, this might be a reasonable choice. (However, older kids should start a savings fund for just these kinds of opportunities.)
You’re the Family Loan Officer
Which of these options would work best for your family? There’s no right or wrong here. The choice is up to you.
Just consider that your answer will teach your child an important money lesson they’ll carry with them for a long time. Make sure it’s the message you want them to remember.
(photo courtesy © Quazie cc2.0)