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Money Management International Improving Lives Through Financial Education
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Are your kids spending machines?

MMI Copywriter

By Kim McGrigg, MMI Community Manager

Marketing to children is big business. It is estimated that companies are now spending over $15 billion annually on advertising that is directly focused on marketing to children. According to a recent Harris Interactive study and, a popular parenting Web site, kids are spending a projected average of $164 billion per year. And, $14.4 billion are offered to grade school age kids for discretionary items.

If that’s not enough to make you want to scream, consider research exposed in a 2009 documentary, Consuming Kids. According to the film, the average American child encounters more than 3,000 commercial messages over the course of one day making them among the highest influencers of everyday purchases. The film also points out that many kids as young as six months have already began the journey of loyal consumerism as they help their parents pick out sippy cups and toys featuring their favorite characters.

For most parents these incredible figures are not hard to believe. We’re no stranger to regular cries for fast food, candy in the checkout isle, the latest video games and expensive clothes. The real question is do we realize the lasting impact of allowing our children to be exposed to and persuaded by marketers. As experienced adult parents, we understand how hard it is to break bad habits. The same goes for young adults when they are forced to learn how to be financially independent – it’s a rude awakening for many.

It is our responsibility as parents to keep our kids from becoming spending machines and ultimately jeopardizing their financial future:

Learn to say “NO!” Remember your parent’s tried and true statements – “money does not grow on trees,” and “money doesn’t buy happiness.” Be prepared for “mommy, but why; everybody else has one?” Quickly and firmly follow up with “because I said so!” – code for end of discussion.

Teach them the goal of advertising. Help them understand that a product advertisement’s sole purpose is to make consumers think they need the merchandise when they clearly don’t. This is a good time to also talk about the importance of knowing the difference between needs and wants.

Limit the exposure to advertisements. Consider limiting the amount of media time allowed (TV, computer, video games). Distract them with more useful activities like planting a garden or building a bird house.

Set some boundaries.  Insist on a percentage of all monetary gifts, earned money or allowance is deposited into a savings or investment account. Explain the beauty of compound interest. Search for investment ideas together and help them stay motivated about watching their money grow.

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Parents' role as financial mentor


There are many tools and resources available to help teach kids about money such as board games and online activities, but the one consistent resource is parents. A recent survey conducted by Money Management International (MMI), on kids and money, found that nearly a fifth of respondents admit to learning about managing money from their parents, and an equal number will teach their kids financial literacy. Additionally, 41 percent of respondents in a recent survey conducted by the National Foundation for Credit Counseling said they also learned financial skills from their parents.

Most kids learn by example. If parents spend money freely, their children are likely to follow in their footsteps and become spendthrifts themselves. While parents may use outside sources to help teach financial skills, it’s important to remember that leading by example will have the strongest impact. Good financial habits encourage healthy financial behavior. The financial experts at MMI offer the following tips on how parents can set the stage as good financial mentors.

Establish a bank account for your child. Three times as many children under the age of 10 now have bank accounts than their parents did at the same age, according to MMI’s survey. Owning a bank account is a sign of financial independence and maturity. This will help your child understand and see the value in saving and establish good early financial habits on spending and saving.

Relinquish control over finances. Parents have the power to choose the amount and how often their kids receive an allowance. To help teach your kids financial independence consider allowing children to decide how and what they spend their money on. MMI’s survey found that 49 percent of parents give their children either full or partial control of how they choose to spend allowance. Allowing children to decide how to spend money will establish trust between you and your children and, depending on the age, it gives kids a self-learning experience.

Help kids set financial goals. While you may trust your kids to responsibly handle finances, it is certainly acceptable to also help guide them in the right direction. Sit down with them and help them plan their spending and saving. Teach them to budget for major purchases. When children learn to set financial goals they are better at planning and are less likely to overspend.

Have your own success story. The best way to be a financial mentor is to have a success story of your own. Share examples of positive spending habits with your kids so they can see the big picture of effectively managing money. Set a good example for your kids so they will have a platform for their own financial success.

Finally, parents wear the hat of a role model in many areas of their child’s life. Being a financial mentor shouldn’t be any different.

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Money Management International (MMI) is a nonprofit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24 hours a day, 7 days a week by telephone and Internet. Services are available in English or Spanish. To learn more, call
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