The iPod Issue: How Much Can -and Should- You Spend on Your Children?

by Stacy Francis, CFP®, CDFA

I took the subway uptown today, to meet a colleague at a favorite lunch place. Turns out, the subway I was in also had twenty-something ten-year-olds, on a field trip coming back from the New York Stock Exchange. As Sebastian is only three, I don’t spend a lot of time around older kids. Now, I couldn’t stop staring at their iPod Nanos, glossy cell phones, Seven jeans and designer handbags.

It got me thinking about the finances of reproduction. How much do parents spend on their children these days, and how much should they spend?

A bit of Internet research told me that the average family spends $7,500 per year and child, not including added expenses pertaining to the increased living space. If you have enough money to set 10% aside for retirement savings, live comfortably, and stay out of debt while spending $7,500 per child -- go for it! But if you have to cut back on savings, skimp on your own needs or pull out the plastic, you should consider cutting back. But how do you make this happen without turning into the mean mom on the block?

An excellent way to go is to give your children some financial responsibility. If you increase their allowances, and in return require that they buy their own clothes, they may think twice about those $200 jeans when they see everything they have to pass up to get them.

Other ideas include sticking to the cheap stuff while your child is still too young to care about brands -- and outgrows things quickly. Vintage stores for baby clothes can be true treasure chests – and you can sell the clothes back when your child has outgrown them. You can also scale down on things like extravagant birthday parties, and of course, encourage your children to take on part time jobs when they grow older. I know that my years at Dairy Queen helped me become the hard-working successful woman I am today!



Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.