We all know what FOMO is right? If not, it’s an acronym for fear of missing out. FOMO has become a huge thing as of late – okay, maybe it’s just a popular term to describe Millennials, but it really is the new keeping up with the Joneses. Many of us simply see what our peers are doing or have and we want the same.
I personally am pretty good at ignoring FOMO, but there’s no denying the temptation. As a new parent, at times I’ll see certain accessories or whatever that other kids have and wonder if my baby needs that too. I think this is pretty reasonable since I’m pretty good at determining wants vs. needs, but I’ve noticed of late is that some parents are letting their kids’ FOMO ruin their finances.
Spending on experiences
As many of you know, I’m a big fan of spending on experiences, but only if it makes financial sense for you and your family. Most parents will try to give their children every possible opportunity, but at times it may not be possible.
After school soccer leagues are likely to be pretty reasonably priced, but if you want to have your kid playing hockey at a young age, you need to be prepared to spend a lot of time and money on that sport. Although there are many subsidized classes and activities, parents will often be responsible for footing most of the bill. It doesn’t matter if all of your kid’s friends are going to summer camp, it may not be possible for you financially and you need to accept it.
The same thing could be said about vacations. Travel is a luxury and you should only take trips if you can afford it. Even when you have the money saved, you might be tempted to spend more. It’s especially hard when you’re travelling with kids as they’ll want to say go to all the attractions or have snacks along the way. There’s nothing wrong with that, but it has to stay within your budget. Way too often, parents allow our kids FOMO to mess with our emotions which ends up busting our budgets. That being said, there are plenty of ways to travel for cheap so just be smart about how you spend your money.
A down payment could crush you
Without a doubt, your kid’s FOMO on real estate could absolutely destroy you. Housing prices have risen so much that many parents are now helping their adult children with down payments. Don’t get me wrong, gifting kids money to help buy a home is nothing new, but it’s almost as if some kids expect it now and they guilt trip their parents into doing it.
Seriously, it’s not surprising to hear parents gifting their kids $50K + just to help them with a down payment. Now, this is okay if you can actually afford to gift that much, but Canadians have record debt levels and it seems like everyone is getting a gift from their parents.
The problem is, many people do believe that if they don’t help out now, their kids will never be able to enter the real estate market. This may or may not be true, but it’s never worth ruining your own finances just to help your kids out. I’m sorry, but if your kids can’t afford a home without your help; it means they can’t afford a home.
Think big picture
I’m not trying to tell people how to adult, but a lot of these spending situations can be turned into a teaching moment. There’s something about kids who understand what delayed gratification is. You know, teach them how if they want something, they should save for it. There’s money vault where mom and dad can just dip into for whatever they want. One money lesson early can have a lasting impact on their lives. My parents taught me to save early and it stuck with me ever since.
You also need to think about your own financial future. I understand that parents want to give their kids everything, but you may not be in the position to do so. You need to look at your numbers and determine what you can actually help with. Don’t make the mistake of helping them now and thinking that money will just be repaid later. Any time you gift money, regardless of what conditions come with it, you need to assume that you may never get that money back.
FOMO can usually be self-contained, but when it comes to our kids, we sometimes let their FOMO cloud our judgement. If you’re in the financial position to help them out, great. But if it’ll put a dent in your financial plan, then you’ll need to tell them no.