Asked by Anonymous

My wife and I recently started running into some financial problems, and we are thinking of reducing our son's pocket money (he is 12). My question is, do we explain the financial situation to him?

Is he too young to learn about all these?

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  • Lee Jin Fei Andre
    Lee Jin Fei Andre
    Level 3. Wonderkid
    Answered on 10 Dec 2018

    To be honest, if you feel that cutting his allowance will cut you some slack, you are probably:

    1. giving him too much in the first place; or

    2. if you already are giving him lower than average, it's probably just enough money for recess and could affect his growth in this crucial period of his life

    Whether it's 1 or 2, he's probably too young to understand the true value of money, especially if he's spending everything you give him. He may not be able to empathise with you both with regards to the situation, and cause greater distress within the family. And if he does, it may cause developmental hindrance especially in matters related to money, which I have experienced before.

    You are currently at a very tricky crossroad - You can either suffer in silence and let your child come to some realisation (hopefully never and lead a blissful and ignorant childhood till he's old enough to realiseand thank you for all you've done for him) or hope for his understanding by telling him early through reducing his allowance and risk developmental issues.

    For either way you as parents will have the shorter end of the stick, and this is one of the challenges of parenthood you will have to face.

    So you have to make a difficult choice, bearing in mind for one's release from suffering, someone else has to pick up the pieces, whether it be you (the parents) or him (the child).

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  • Elsa Goh
    Elsa Goh
    Level 5. Genius
    Answered on 10 Dec 2018

    I think it is fine to just give a broad, vague hint, without making it seem like there are even financial problems. Probably something along the lines of managing money better. But not to tell him about the true nature of the problem.

    Reason: I don't think it is good for a kid's developing psyche to inform him of the full extent of your problems as it will erode his self-confidence and feeling of security, which will follow him into adulthood. As much as we wish that our children learn not to derive self-confidence from having money, we cannot deny that it does affect confidence. I think I saw an article once about how it affects children into adulthood, causes them to present themselves differently and make different decisions. So im not saying don't tell him so as to spare his feelings, but rather don't tell him so that his mental development will not be adversely affected in the long run.

    If he persists in asking, just tell him you both recently did a review of your finances and felt that the family as a whole could afford to cut back on expenses generally, in order to prepare for the future or any emergencies.

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    • Lee Jin Fei Andre
      You are spot on with your advice. As someone who has went through such an experience during my childhood, I feel it has affected the way I treat money in my adulthood. And I daresay it is not a pleasant feeling at all.
      10 Dec 2018
    • Elsa Goh
      Thank u Andre. I wish i can find the article now. I cannot recall where i saw it zz.
      11 Dec 2018
  • Loh Tat Tian
    Loh Tat Tian
    Level 6. Master
    Answered on 10 Dec 2018

    I feel its good to let the kid understand a bit. Make it simple like, family got not much money. Need to reduce spending. So papa mama can give you only this much now.

    The kid can get frustrated and angry, but it's about the kid also loving the parents. It's a good way to incalcate family values too.

    If the kid accepts, even better (like what happen to me before). For the most part, I didn't know what is financially difficult. I only know less money, not hungry. That's fine to me

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  • Yinglin Chua
    Yinglin Chua
    Level 4. Prodigy
    Answered on 11 Dec 2018

    Not too young. 12 is definitely capable of learning finances and understanding the situation.

    Suddenly reducing his allowance without a good explanation would leave him thinking (or worrying) about a lot of things and lead to unnecessary anxiety or false awareness of the family financial situation.

    The only thing you need to consider is how to bring him into the discussion. Keep it simple, don't need to go into lengthy details. And say his allowance is part of the expenses that needs to be re-budgeted. It can be a temporary measure, if so, assure him once the bad times are over, it will be readjusted.

    If you want to give him a good financial lesson... Say, this is the amount you plan to cut.. ask him if it's ok, or if he thinks he doesn't need that much, will he be willing to take a bigger cut so that the family may resolve the financial situation even sooner.

    You do need the kids to rein in unnecessary spending on their end as well, and also to understand why for now, they may not get their "requests" fulfilled.. e.g. the yearly trip, the usual Christmas gifts etc.

    It's worse when they suddenly find themselves from "well to do" to "pauper". Things can go better or worse, but keep them updated along the way, say monthly or quarterly update on the financial situation. Debrief and thank everyone for helping to tighten their purse strings in the trying times.

    Everyone is on the same boat. Sink or live together.

    Hope you get back on track soon.

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  • Tiffany SQ
    Tiffany SQ
    Level 3. Wonderkid
    Answered on 10 Dec 2018

    Hi there, 12 is able to understand the family financial situation already. If u cut his pocket money without a reason and he gets angry, I think that outcome will be worst.

    Proper communication for the kid to understand should be made, rather than keep assuming that he does not understand anything.

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  • Yong Kah Hwee
    Yong Kah Hwee
    Level 6. Master
    Answered on 10 Dec 2018

    I do think that you should try to expain to him. Make it simple to understand! 12 is not too young to be learning about money. In fact, some people start way earlier!

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