With X Box, I Pod and all the other high tech gadgets that our children want, parents often find it hard to say no. These toys are expensive, and if your child is not old enough to be earning money, then it’s mom and dad who pay the bill.

Yes, parents have a responsibility to provide the necessities and a few luxuries of life. The luxuries must be within the family budget and carefully given to the child who lives up to the family rules and expectations. By establishing a reward system for good behaviour, quality grades at school and chores around the house, parents and children will have a better understanding of when requests for the "extras" can be justified.

Children may come to expect that all they need to do is ask, and mom and dad will hand over the cash. The problem with this scenario is that parents could be setting themselves up for a very long period of dependency. As children move into adulthood the toys don’t get cheaper. You will then be looking at cars, or possibly a down payment on a house. Unless you learn to say no, you could be jeopardizing your own financial future.

There is nothing wrong with giving money to your children as long as it is within your financial means. Parents typically expect to coast into their retirement years without financial worries, but this may not be the case if their children are constantly at the door asking for money. Parents who cannot say no may have to re-mortgage their house or take out loans to help their children.

Learning how and when to say "no" to your children can be one of the most difficult challenges a parent can face. But unless you develop the discipline early you may be in for a long period of financial support. And this endless generosity may spill over to other family members and charitable organizations. Definitely offer financial support to those who need it, but do not let it jeopardize your own financial plans.

So, how can parents prevent this financial dependency? Start by encouraging your children to create a savings strategy to meet their wants. Help them set their own financial goals and show them how these goals can be achieved. Once children learn that they can buy anything they want as long as it is within their financial budget they will have developed an essential skill that will help them toward financial independence.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.