Why Parents Must Recognize Their Investment vs. Expense Mindset
Yesterday I wrote about how parents can know if they’re making a good or bad “Investment”. While discussing this article with a client, the main question they had was why does this matter. As I was writing the article, I thought it was obvious why it mattered. So, this line of questioning made me rethink how I was presetting the concept of spending money on private coaching, tutoring, camps, and numerous other things as a potential investment in a child’s future.
The client said something to me like this:
Who cares if I view the money I spend on my son as an investment or an expense? Either way the money is spent.
My response to help clarify this question comes down to mindset. A parent’s mindset towards their children matters. Particularly the nearly 20% of U.S. parents who spend more than $12,000 a year on youth sports, per child.
If a parent is “investing” $12,000 a year for their child to play sports, then I would expect that parent to have a more professional mindset of wanting to manage that “investment” wisely. On the other hand, if that $12,000 is simply an expense, then I would expect that parent to have a more casual mindset being far more nonchalant.
Most parents don’t consciously make the decision to have a professional investment or casual expense mindset with the money they spend on their children. However, all parents do this subconsciously. Youth sports is roughly a $17 billion industry and rising. Parents are willfully pouring more and more money into this industry for a reason.
Undoubtedly, there is a large percentage of parents vying for college scholarships and professional contracts in their child’s future. These are the professional investor parents. All other parents are the casual expense parents.
With this in mind, if you are in that 20% of parents who spend $1,000 / month on sports, it’s best to consciously admit which type of mindset you are using with your money. Then, have this conversation with your child so you both can get on the same mindset page.
If you are an investor and your child is nonchalant there’s going to be relationship problems between you two long-term. It’s best to nip this friction in the bud immediately as letting it fester will only make things worse.