Should Kids Make Big Money Decisions?

US News

According to a new study from Coldwell Banker Real Estate, kids are the ones calling the big money shots in families these days. The study, which surveyed 2,800 parents, found that about eight in 10 millennial parents, who are between the ages of 18 and 34, and seven in 10 Generation X parents, who are between the ages of 35 and 49, say "most of their major purchasing decisions revolve around their children," and that includes home purchases. But just over half of baby boomer parents, who are between the ages of 50 and 69, said that was the case when their own children were young.

Those findings suggest that kids hold more sway than ever in determining whether mom and dad opt to move to a new house or make other major financial decisions. And that, says Dr. Robi Ludwig, psychotherapist and lifestyle correspondent for Coldwell Banker Real Estate, is not necessarily a good thing, because it gives kids too much power. "They are kids -- they are just thinking about themselves in the immediate now, and no good decision can be made that way. That's where the adults come in. It's really giving away your job as the adult in the family [to let kids make those decisions]. That's not healthy, and it's not fair," she says.

The decision-making shift, Ludwig says, reflects a larger trend in families where parents are more involved in their kids' lives and are more kid-centric in general. Thirty years ago, Ludwig says, parents still held onto the "children should be seen and not heard" mentality. Now, she says, parents tend to view major decisions, like buying a new house, through the eyes of their kids, instead of simply making the decision that might be best for the family in the long run.

[Read: Couples Are Happier Sharing Money Decisions.]

"We're very focused on what contributes to making a healthy and happy child. There's a lot of empathizing with our children. Parents feel it's their job to make their child happy, successful and fulfilled and to make them feel good when they walk into the world," she says.

While much of that is positive, Ludwig warns that parents can take it too far, especially when it comes to financial decisions. "If you focus too much on kids' needs, it can create a feeling of resentment. In some ways, you're not preparing your child for the outside world. The world won't go out of its way to make sure you're taken care of all the time. Life can be very challenging, and the only way to help them deal with that is to allow them to fail, to deal with transitions and to help them get through it. As a result of that, they develop an inner resilience," she says.

Kids who have to move to a different area for their parent's job, for example, usually adjust to their new environment very quickly, for example. "If a move is good for a parent on multiple levels, then the child will adjust to that. Especially now with social media, kids can stay connected to friends in different states," Ludwig says. So she encourages parents not to let fear of a child's transition dictate a home purchase decision that would benefit the family overall. "If you teach your children to live in a bubble, they will be tremendously ill-equipped to deal with the realities of the world that they will face," she adds.

[Read: Survey: Teens Are Stressed About Money.]

The survey also found that parents are more concerned with how moving will affect their kids than previous generations were, and that each generation believes they are more involved with their kids' lives than their own parents were. Perhaps because of those closer bonds, younger parents (the millennials) are more likely to say it's important to them to live near their parents while they raise a family.

Ludwig urges parents considering a major real estate decision to take a close look at the pros and cons, including the short- and long-term impacts. "If a job opportunity opens up, and it offers your family an opportunity for a new life or new opportunities, then you want to consider it," she says, even if it might be difficult for kids in the short term. "Change can feel threatening and scary, but it has the potential to be a very positive thing," she says.

[See: How to Talk to Millennials About Money.]

She also says parents should involve their children to some degree, while still making the final decision themselves. "On some level, children understand that they're the child and feel relieved when parents make the final decision," she says.

Ultimately, she says, it's OK for the parent to say, "Because I said so."



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