How to Talk to Your Kids about Money: Kris, Lora, Katy

Learning to Say No

Katy, 15, shows off her prized possessions. "I have two iPhones, and these are my favorite Chanel glasses. I have one Dolce & Gabbana purse. Within a year, I've had three pairs of Uggs," she says. "When I think of designers, I think of, like, Chanel, and Coach and Louis Vuitton. Usually, when I go shopping, I get maybe $200 each time. I usually shop at American Eagle, Forever 21, Abercrombie & Fitch."

"This is her closet," says Katy's mom, Lora, touring her daughter's bedroom. "Everything has a name on it: Hollister Co., Victoria's Secret."

"I love it when I get compliments on my style or my clothing," Katy says. "I feel a lot prettier when I'm dressed up in designer clothes, rather than walking around in sweats and a tank top."

Katy's family lives in a 105-year-old Victorian home, and even though she has 10-foot ceilings and a fireplace in her bedroom, Katy described it as the "ghetto room." So, her parents gave her a bedroom makeover as part of her Christmas gift.

[AD]"The theme in my room is hot pink and zebra," Katy says, showing her bedroom. "I love hot pink and zebra."

"It ended up costing us $1,200," Lora says.

"Over my bed, I have this huge portrait of me," Katy says.

"And then she talked her dad into a plasma TV," Lora says.

"I have a big, 50-inch, flat screen Samsung TV," the teen says.

Lora and Kris say Katy is just a normal teen and admit that it's not Katy's fault; they have trouble saying no to their daughter.

"It can be easier to give Katy what she wants rather than to see her unhappy," says Katy's father, Kris.

"Katy pitches a fit when she doesn't get what she wants," Lora says.

"I'm spoiled because my parents do usually get me what I want, but my satisfaction doesn't last for too long, and usually I do ask for something else," Katy admits.

"I have a hard time saying no, and with Little Miss Negotiator, it's definitely difficult to say no," Lora says.

"I'm really good at manipulating the situation," Katy says with a smile.

Lora says it's time to rein in Katy's costs. "Katy has gone through her second iPod within a year. She's gone through three pairs of Uggs. She's also on her second laptop. Katy doesn't think about how much things cost and forgets to take care of them."

[AD]"Katy doesn't understand the family financial picture. We've not involved her in our budgeting, so she's had really no reason to understand it," Kris says.

"My parents have never sat me down or really gave me a talk about money, so I really don't have a clue," Katy says.

Lora tells her daughter, "Money is finite; it's not infinite. We don't have a money tree in the backyard."

"But if they do make those, we should get one!" Katy jokes.

"OK, so you're a shopper," Dr. Phil says to Katy.

"I like to shop, yeah," she says. "Do you like my outfit?"

"I do. Let's talk about that, actually," he says, addressing Katy's parents. "Now, let me get this right. Y'all are coming to a show about talking about kids and money, overspending, no budget, and so you spend $185 on an outfit for her to wear to the show to talk about overspending on clothes and things."

Lora explains they gave Katy a $100 budget for a new outfit for the show.

"Why did you go over budget?" Dr. Phil asks Katy.

"I tried to stay in budget, but not only did my whole outfit cost $185, but I also bought another shirt I found that was really unique to me, and I like to buy things that are unique that I can't find where I live," she says.

Dr. Phil goes over the list of items Katy has asked her parents for, and they've bought her: "Three pairs of Ugg boots, a 50-inch plasma TV, two iPhones, three laptops, a diamond ring, Chanel glasses, Coach purse, cell phone service, cheerleading uniform, cheerleading shoes, cheerleading fees, nails, hair, tanning, self-portrait above bed, 15th birthday party " that kind of grew, didn't it?"

[AD]"Yeah," Katy says.

"How many were supposed to be there, 20? And it wound up to be 150?" he asks. Dr. Phil continues: "Bedroom redo " chandelier, hot pink walls, zebra sheets and rug " shopping at the mall two times a month, entertainment/movies with friends. So, they treat you pretty well."

"Yes, they do," Katy says.

"So, what do you think the total is for everything I just listed?" Dr. Phil asks.

"I honestly have no clue," says the teen.

Dr Phil says that's the first clue that their situation is out of control. "Would it surprise you if they had spent $10,000 on all that stuff for you?" he asks her.

"It honestly doesn't surprise me," she says.

"Would $15,000 surprise you?"

"Yes."

"What if they had spent $20,000 on all that stuff. Would that surprise you?"

"Yeah, it would."

"Would it surprise you if it was $27,289?" Dr. Phil asks.

"Are you trying to tell me that's the total?" she asks.

"That's the total," he says.

"In two years," Lora adds.

"That's a lot of money," Dr. Phil says.

"Yeah, it is," Katy agrees.

[AD]Dr. Phil turns to Lora. "OK, so why are you here, Mom?"

"We're here to help Katy live within her means and not get stuck in the credit crunch that everybody else is in," she says.

"You kind of defend her too, don't you?"

"Yeah, I defend her because I feel like Katy, for the most part, is very thankful. She makes good grades, she doesn't do drugs, she's very busy with school, and she's a great kid. She just spends too much money," Lora says.

"You admit that it's hard to say no. You admit that she manipulates you, and works you and that she doesn't take care of things. You said you often have to buy her things twice because she neglects, or ruins or abuses the first thing," Dr. Phil says.

"Yeah, that's a problem," Lora says.

"Is that true?" Dr. Phil asks Katy. "Why would you do that?"

"Because I guess I take things for granted," she says honestly.

Lora expects that will change when Katy begins working over the summer.

"Here's the thing, and this is probably something that you don't want to hear," he tells Katy, "but we are in a time, we are in an era, an economic situation, where you just simply can't live as large as you might want to. You don't want to hear that, do you?"

"I don't, and I don't think any teenager wants to," she says.

Dr. Phil turns to Lora and Kris. "See, but that's the problem. The job as parents is to prepare the child for the real world, right?"

"Absolutely," Lora says.

[AD]"If you don't teach the child how it works in the real world, then the child gets out there, gets all these credit card offers that they send to college students, they wind up in debt, they're totally out of control before they ever even have a chance to start in life. Did you hear her say she has no idea how much you spend on her? She has no idea how much that stuff costs. All she knows is she wants it," Dr. Phil says. He turns to Katy and says, "And if you don't get it, if they tell you no, even if for a little while, you just give them all kinds of trouble, don't you?"

"I guess I do," she says with a smile.

"Part of this is not your fault. Part of it is," he tells Katy.

Dr. Phil turns back to Katy's parents. "One of the big problems here is you guys don't seem, to me, to be willing to step up. You're kind of defending her because you don't want to really be hard on her, right?"

"Right," Lora says.
 
"And see, here's the thing: I think overindulgence is one of the most insidious forms of child abuse you can do because it's quiet, it's secret, but you're cutting their legs out from under them. They don't understand money. They don't understand what things cost. They don't understand the responsibility of having to pay for things, so they go outside that gate and here comes the big money car, and smack, they're in trouble, and they spend the rest of their life digging out because you didn't have the courage to tell her the truth," he says. Lora says she agrees, but Dr. Phil is doubtful. "Then why haven't you been telling her the truth? Why haven't you been teaching her the responsibility? Why haven't you been showing her how the world really works?"

"We have tried things like chores and her earning her own money, and she's so busy and everything, we think " "

Dr. Phil puts his head in his hands.

Lora laughs and continues, "She's so busy with cheerleading, and school and working hard to make good grades and stuff, and we have tried a lot of different things, like chore charts and allowances, and sometimes, with things like cheerleading fees, she doesn't know the price of cheerleading fees."

"Blah, blah, blah, blah, blah, blah … " Dr. Phil says. "See, it's hard to be hard on her, in your definition, because she's so charming."

"And she's such a good kid, right," Lora says.

"And I could say the same thing. You all are obviously nice people. You're obviously responsible and loving parents, and you're also from the South, and I really like that, so it would be really hard for me to be hard on you, but I'm going to overcome that right now and tell you, listen: You're cheating her to make yourselves feel better," he says.

[AD]Dr. Phil tells Katy, "You have to realize that your parents have limited income." He reviews his notes about how much money Lora and Kris let Katy spend at the mall each month. Lora says it's about $300, but Dr. Phil's quotes her saying, "'We try to keep Katy's shopping budget low, $200 to $400, but she spends $500 to $600 on mall trips two times a month.'"

"I don't remember saying that. It's not always that much a month, I swear," Lora says.

"Katy, you have no hope," Dr. Phil jokes.