Financial Psychology: Parenting a Penny Pincher

Updated April 13, 2023

Is your child a Big Saver?

Unlike their spendthrift peers, little penny-pinchers cannot bear to part with their money…no matter how much they want something. While some young penny-pinchers are just inherently frugal, others are truly tightfisted. Kids who are frugal are always looking for a good deal or bargain, and can refrain from spending on items or experiences that may bring them real joy.

For some penny-pinching kids, the idea of spending money at all causes them distress even when it comes to a real need (like buying lunch!). While some level of frugality is healthy, tightfistedness can be a problematic approach to money so it’s important to help your kiddos find a balance.

Help your child find a balance

Parents of penny-pinchers (as well as spendthrifts and altruists) can start by focusing on the basic idea of a budget. Budgeting is an actionable, living plan for how to spend, save and give your money. A budget helps people keep track of their income (money in) and expenses (money out) to make sure they are spending wisely.

The key is to encourage your child to part with their money when it is truly worth it - i.e. the purchase has been thought through, fits into their budget, and brings them real joy.

An anecdote from a BT Mom

As Benjamin Talks Co-Founder Nikki Boulukos relates, “George, while not always a penny-pincher (what seven year old doesn’t want extra Robux sometimes?!), has an natural desire to save his money. When George receives money, whether through allowance, gifts or small jobs, his first inclination is to put all of his dollars in SAVE. While his younger siblings jump at the chance to tag along to Target, George will often pass on the offer to pick out a special item while running errands. He really has a more innate sense of joy that he didn’t spend (normally because he has a larger goal in mind) than if he had experienced that instant gratification at checkout.”

Adds Nikki, “However, there are times when his frugality doesn’t pay off and has even left him with a sense of missing out. On a family vacation where his younger sisters picked out a magnet and snow globe souvenir, George had ultimately decided he didn’t want to use his dollars...only to later regret not having a special memento to remember the trip. This was a good learning lesson for him that it’s ok to spend your money on something meaningful (within your budget), especially if it’s a purchase that truly sparks joy.”

Practice financial skills from an early age

By helping kids build a balanced approach to spending, saving and giving, parents can show penny-pinchers that parting with money on things that really matter can enrich their lives and the lives of others. While there is little doubt that some level of frugality is admirable, spending on needs (and some wants!) is a necessary part of handling money. By practicing this from the youngest age, kids can work out the spending kinks before it really counts.

Is your child more of a spender? Here’s our guide on parenting a spendthrift. Maybe you have a giver on your hands…. we’ve got you covered… Teach your child to balance their giving tendencies.