Every Dollar is a Choice: Parenting & Building Families with Conscious Spending

Paul FennerPersonal Finance

Kids & money, Tamma Capital

Research is increasingly shedding light on an often overlooked fundamental truth—happiness is essentially the outcome of our conscious choices. Every decision we make mirrors our priorities and establishes a subtle yet significant connection with our overall happiness. One could say that the checkbook stands as a testament to this truth. I have a phrase, “the checkbook never lies.” Show me your checkbook, and I will show you what you value.

As parents, our love for our children and spouses is indisputable. Yet, it’s a harsh reality that this love often encounters conflicts over parenting decisions, household chores, and especially finances. Therapists witness this recurring pattern time and again in their practices. These conflicts can strain the happiest marriages, reinforcing the need for conscious financial decision-making.

Opportunity Costs

At the heart of these financial conflicts is an economic principle known as “opportunity cost.” It signifies that every dollar spent on one thing could have been allocated to something else. Every expenditure is a choice, and these choices have far-reaching consequences for our happiness and the well-being of our families.

When families seek to improve their financial situation, the most common approach is to trim the small, seemingly unnecessary expenditures. However, saving becomes an uphill battle when it means shrinking from your current standard of living with daily doses of deprivation. I propose a different approach: focusing less on small luxuries and more on big-ticket items could leave more room for the little joys of life.

Numbers Don’t Lie

Consider this: the difference between spending 33 percent and 25 percent of your income on housing is 8 percent, which could be reallocated to a myriad of other experiences. An income of $150,000 or $200,000 translates into $12,000 or $16,000, respectively. This substantial amount could cover numerous dinners out, movie tickets, weekend trips, or even a cleaning service. These are the experiences that cultivate happiness and weave the fabric of family memories.

On the flip side, consider the struggle to save more when earning more is not an option. Cutting out those dinners, movies, and weekend trips requires a daily commitment to self-discipline—a virtue many of us have in limited supply. However, buying a less expensive house or car only requires a single act of self-discipline, proving more achievable and less mentally exhausting.

As a father of four, including a set of triplets, I’m no stranger to the tightrope of financial decisions. My wife and I would love to allow our children to partake in all the extracurricular activities they are interested in without overscheduling them. These decisions often generate frustration and conflict, both with our kids and between us. Here, though, lies the chance for an honest conversation about the reasons behind our choices—an invaluable lesson in reality and responsibility for our kids.

A Change in Mindset

One of the most powerful tools we can equip our children with is an entrepreneurship mindset, underlined by a strong internal locus of control. Instilling in them the belief that they are responsible for their destiny and that the world owes them nothing prepares them for life’s challenges. This mindset fosters resilience, self-reliance, and an understanding that every opportunity must be earned, not handed over.

A valuable parenting lesson is to teach our kids early that every dollar represents a choice, a step towards a future they have the power to shape. Understanding the value of money, the concept of opportunity cost, and the principles of conscious spending are crucial life skills that can greatly impact their future financial stability and happiness.

This awareness of ‘every dollar is a choice’ will not only guide them in their present but will serve as a sturdy financial compass throughout their lives. As parents, sharing this insight is one of the most powerful gifts we can give our children, ensuring their financial decisions are informed, conscious, and reflective of their true values and priorities.