At some point your child has probably observed you making a purchase (probably daily!). Maybe you’ve even practiced playing “shop” with them as a way to introduce them to how to use cash. Either way, now you need to introduce to them a big distinction in consumption: things you want versus things you need. We’ve all had a moment where our sweet toddler suddenly morphs into a tiny tyrant, demanding that we purchase the lollipop she’s holding—and that we do it right now. Saying no is hard, and so often we fall back on that old excuse: “We can’t afford that.”
Saying “No” to Children’s Demands
So what do you do when your child starts making material demands? Wealth in Families by Charles Collier offers a straightforward strategy—just don’t buy everything your children want, and be comfortable with saying no. Silver Spoon Kids by Eileen and Jon Gallo advises that you elaborate on your no by explaining why, in the context of your own values or budgets, you are choosing not to buy what they are demanding. You can also transfer their demand to a “wish list” (that idea comes courtesy of The MoneySmart Family System by Steve and Annette Economides) or, if you start them on allowances at a very early age, you can ask them if it’s in their budget (as advised in The Entitlement Trap by Richard and Linda Eyre).
As for whether to ever tell your child “We can’t afford that,” all the experts seem to agree that if you can afford the desired item but are choosing not to buy it, it’s much better to explain why. Although it’s hard to tell the child you love no, it’s much better than the alternative—creating a tyrant used to having all their demands fulfilled. Plus, the world will use that word too, and you don’t want them to be unprepared the first time someone who isn’t Mom or Dad tells them no.
Do you want it or need it?
Once you’ve headed off the tantrum, it’s time to have a conversation about the difference between what we want and what we need to survive. You can approach this conversation directly with your child or augment your conversation with a variety of resources that have been developed for that purpose. For example, a children’s book titled Do I Need It? Or Do I Want It? by Jennifer Larson can help you talk through the topic. Neale Godfrey has some excellent advice in Money Still Doesn’t Grow on Trees. When she and her children drove down highways, they would discuss each advertisement they saw and evaluate whether it was something people needed for survival or just wanted. You can recreate her exercise with ads in magazines or on the television.
As recounted in the book Don’t Eat the Marshmallow . . .Yet! by Joachim DePosada and Ellen Singer, researchers at Stanford University conducted an experiment wherein children were offered one marshmallow at that moment or two if they waited until the assistant had returned. The ability to delay gratification ended up being a significant predictor of whether the child would have success and stability later in life. Erica Sandberg in an article for LearnVest says that when your child is three years old, you can practice this skill by offering them a cookie now or letting them have two cookies if they wait ten minutes. No cookies are given if whining ensues. (I did try this exercise with my children and have been able to get them to see the benefit in very short-term delayed gratification. I’m not sure there are enough cookies in the world to turn this into a real skill, but it does provide some fun insight into their personalities.) Let me know how this goes if you try this in your own home!
 Kade, Allison. “Money Milestones for Kids: A Timeline.” 24 Oct. 2011. LearnVe$t. Web. 8 Jul. 2014.