By Douglas Goldstein, CFPâ

Recently my son wanted to watch a soccer game, and he asked me why we don’t have cable television.  I explained that I didn’t think the benefits of TV were worth the monthly cost.  Another child who overheard this conversation remarked, “We could have a family pizza dinner twice a month for the same money.”  Another child commented, “With the money saved from not paying cable, we could save and go on vacation.”  I pointed out, “We could also make sure everyone has food to eat.”

This conversation reminded me of the different approaches people have toward money: to be used for necessities, spent on instant gratification or saved for short- and long-term goals.

When a child’s every wish is taken care of, it is difficult to teach the concept of prioritizing needs and wants.  However, if children don’t learn about fiscal responsibilities, they will grow into fiscally irresponsible adults.  Instant gratification feels good at the moment, but before you make an impulse purchase contemplate whether that good feeling will still be there when the credit card bill comes at the end of the month.

It’s hard to watch parents give into their children’s material requests knowing they don’t have the means to purchase them.  It is also difficult to watch parents say no to their children’s requests because they can’t afford them.  However, the second scenario may be better, since even though the original request isn’t met, the child might walk away from the encounter with the knowledge of how the real world works.

Managing finances is a balancing act: your income can only be divided among so many priorities.  It is up to you to decide which pieces are more important and where your hard-earned money should be spent.

Taking care of your family’s necessities extends beyond putting food on the table.  It means planning for your immediate, short-term and long-term goals.  While my son won’t watch the game tonight, he will have a nutritious dinner.  And one day he’ll have a family of his own and will decide the best way to save/spend his own money.

Douglas Goldstein, CFPâ, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc. Member FINRA(formally NASD), SIPC, MSRB, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book, Building Wealth in Israel: A Guide to International Investments and Financial Planning, (with a guest chapter on taxation by Leon Harris, International Tax Partner, Ernst & Young) is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942. Building Wealth in Israel, ISBN 193268784X 308 pages