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Financial Growing Pains

Whether rich or poor, old or young, a novice money manager or a seasoned pro, everyone suffers a financial crisis from time to time. Even kids. Granted, from a grown-up's point of view, being denied a treat in the supermarket or running out of money three days before you're due to get your allowance may not seem like a big deal. But to a child, such events can be traumatic. And depending on how your child handles the crisis, her money worries may soon become a genuine crisis for you as well.

Here, some of the most common financial storms, and how to help your child weather them.

The Very Public Tantrum

For some families, shopping with a youngster in tow is about as enjoyable as undergoing a root canal. The child clamors for every treat or trinket she spies on the shelves, then collapses in a paroxysm of anger and tears when Mom or Dad says no. You end up either carting your little banshee out of the store, waiting with growing embarrassment for the tantrum to blow over, or, worse, giving in. But, warns financial planner Elizabeth Lewin, coauthor of Simple Ways to Help Your Kids Become Dollar-Smart, "if they get something every time you go shopping, they're going to expect something every time you go shopping."

What To Do You can't blame your impressionable toddler or preschooler for wanting items tantalizingly displayed before her. So keep her away from temptation whenever possible by leaving her at home with your spouse or a babysitter when you need to shop, Lewin advises.

If that's not an option, bring some diversions (such as a few favorite toys) and establish clear ground rules before you set foot in the store, suggests psychotherapist Olivia Mellan, author of Overcoming Overspending. For instance, you might offer to buy her one small treat of her choice, but no more. Or, if your child is old enough to have an allowance or other savings of her own (typically, kindergartners and up), invite her to take along some of her own spending money to use as she pleases.

If your child has a tantrum anyway, stand your ground, no matter how long you have to wait or how embarrassed you become. "Never buy off the tantrum once it's started," says Mellan. "All that teaches your child is that she'll get whatever she wants if she screams loudly enough."

The Sqandered Allowance

You followed the experts' advice and gave your child an allowance as soon as he turned 5, setting clear rules about what he was expected to use the money for. The only trouble is, he's not following the guidelines. Maybe he consistently runs out of money before payday or blows his cash on junk food or some other verboten item. Whatever the problem, it just isn't working  -- for either of you.

What To Do Perhaps the difficulty doesn't lie with your child's money-management skills but with the allowance system. Before you read him the riot act, have a heart-to-heart about why he's not following the system to determine if the guidelines are truly realistic. Perhaps the expenses you expect him to cover with his allowance are too great for the amount you give him. Maybe there are extenuating circumstances, like a special gift he wanted to buy for a friend or family member. Or it could be there are just too many rules.

But if you both agree the allowance system is fair and he's just having trouble spending within his means, lend him a hand. Review what he's spent his money on, then help him prioritize his expenses, to see which items he could do without and which he can postpone until he's saved more money. "Don't turn an allowance into a power struggle or a punishment tool by, say, docking him pay for a week," says financial expert Adriane Berg, coauthor of The Totally Awesome Money Book for Kids and Their Parents. "That teaches resentment and guilt, not smart money habits."

The Must-Have Shoes

Your grade-schooler desperately wants the $75 sneakers he claims "everybody" has, but they simply cost too much, or you have the money but not the will to pay twice as much as necessary for a pair of shoes because they have a particular logo on them. "You shouldn't buy something that you can't afford or don't believe in," says Berg, "but you also should recognize that it's perfectly natural for your child to want something he believes all his friends have."

What To Do Be honest about your reason for refusing to buy the item, and soften the blow with a little sympathy, Berg advises. "Kids really respect you when you respect them enough to tell the truth or to share your values," says Berg. "What they can't handle is 'no, no, no, no' without an explanation."

If the item is important enough to your child, you can also help him find creative ways to get it on his own. Maybe you can give him the amount it would cost to buy an ordinary pair of sneakers and offer suggestions about how he might earn the rest or find the same item cheaper.

The Larcenous Tot

An impulsive act of petty thievery  -- say, a piece of candy lifted from a store shelf, or a friend's toy that mysteriously appears in your home  -- doesn't necessarily mean that your child is a juvenile delinquent. At some point, many young children take something that doesn't belong to them, say experts. "The trick is to know whether it's an impetuous act that's unlikely to be repeated once you lay down the law," says Berg, "or a more serious symptom."

What To Do Talk first, punish later. "Be firm that you know what went on and ask your child why she did what she did," says Mellan. Her answers, along with your own knowledge of your child, will tell you whether she just gave in to a fleeting impulse or has a more serious problem. But, Mellan adds, "whether it's a first-time offense or a recurrent behavior, you have to be very clear that stealing is wrong and that there will be significant consequences as a result."

In all cases, experts agree, those consequences should include the child's owning up to what she did, the item being returned, and, depending on the circumstances, returning it herself to the person or store from which it was taken and apologizing for her actions. For toddlers, preschoolers and sensitive first-time offenders, the embarrassment of this exercise may be punishment enough. For most school-age kids and repeat offenders, some additional form of punishment might be warranted, such as taking away television privileges or playdates with friends. Notes Lewin, "The point is not to humiliate your child but to teach a lesson about what is and isn't acceptable behavior."

Contributing editor Diane Harris is writing a book on women and finance.

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