Set logical family spending priorities

Beth Rutherford figures that an upcoming birthday party for her 5-year-old daughter Haley will cost about $350.

She’s renting out space at a gym for Haley and seven of her friends to do gymnastics, buying snacks and party favors, ordering a cake and, of course – buying the presents.

“I swore I would never be this way – spending a lot on birthday parties. When I was a kid we had a cake and played in the backyard,” Rutherford says.

Haley’s party is not going to push the middle-class family over the edge financially. But Rutherford says the birthday party is just one example of how she feels compelled to give her kids everything she didn’t have as a child.

Spending on your children is a natural instinct, but if you are neglecting things like saving for retirement or saving for a rainy day, you might want to rethink your priorities, financial and family experts say.

“Start looking at what is a need and what is a want. Needs have to go in the top of the list,” says Sara Allen of Consumer Credit Counseling Service. “Realistically, there are a lot of things we do for the kids. We want them to go to soccer. We want them to have the laptops. But is there a cheaper way?”

The U.S. Department of Agriculture estimates that raising a child born in 2006 to age 17 will cost a family approximately $260,000. That’s not including the cost of college.

Setting priorities about spending according to your values and living within your family’s means will not only help you but will set an example for children who learn by imitation.