Kids and Money

It is most certainly that time of year. The kids are back in school which means the list of activities available for the kids are plentiful. How do you decide among the choices of soccer, karate, piano, dance, and gymnastics without breaking the budget? Here are a few tips to guide you through:

1) Realize that little Johnny or little Suzy most likely is not going to be the next Gabrielle Douglas or Michael Phelps.

Especially during Olympic years, many parents start having grand dreams for their kids.  There is certainly nothing wrong with exposing your kids to different activities and then seeing if they have a talent for AND love for a particular sport.  Just don’t go crazy with the aspirations.  There are parents who spend thousands, even tens of thousands, of dollars per year for their little one to train with a particular person or place.  Unfortunately, there are many people out there who will take advantage of this and promise big things to overly excited parents.  While almost all activities cost some money,  just be reasonable with what you spend.

2) Look at your budget.

This is how you know what you should spend.  If you are having trouble covering the mortgage, keeping the lights on, and putting food on the table, then spending just about anything on kids activities is out of line.  If your child truly has a talent, taking a little time off from that activity for a short period while you get back on your feet is not going to ruin them.  On the other hand, if you make $20,000 per month, have no debt, are saving for retirement and happen to be spending $500 per month for a private golf coach, then more power to you.  If that is what you want to spend your money on and you can afford it, then go for it.  Just remember about opportunity cost.  Anytime you spend money on something, you cannot spend that money on something else (like maybe an investment).  Bottom line is that you need to do a budget before each month begins and determine what you can truly afford.  That beats willy-nilly (that is a technical financial term by the way) saying yes to every single thing your little one wants to do.

3) Don’t ruin dinner.

Speaking of saying yes to everything, don’t do that!  It’s important that you determine, as the parents, what is appropriate for the amount to time your kids spend in activities outside of the home.  Mandy and I are constantly discussing this and have determined that our first grader doesn’t need to be involved with more than one activity at any given time.  This can be really tough, but it is important that we eat dinner together as a family every night possible.  During the school year, that means she only does dance.  She absolutely loves it.  It is tempting to sign her up for theater classes (which she did during the summer and loved) or soccer (she loves playing sports as well), but we have just decided that family time is too important.  Instead, we act out things at home or I play soccer with her in the backyard.  That doesn’t mean she is getting top notch training from us or anything, but she is only in first grade!  As she gets older, we plan to expose her to more things, but it still will have to be within reason.  If you have never discussed this as a family before, now is the time!  Just like financial opportunity cost, remember that when you spend your time doing one thing, that is time you can never get  back!

Hopefully these tips will help you make sense of the chaos that can ensue from kids activities.  The key is to have a plan and stick to it.  I seem to say that about a lot of things!

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