How do we teach our kids to spend smart? It starts with taking them with us when we shop in stores or sitting them down with us when we shop online and talking them through what we’re doing to spend wisely.
There are various ways to help your kids spend wisely. The important thing is to give your kids more and more responsibility for spending decisions and embrace your gatekeeper role by avoiding the temptation to intervene if they make bad decisions. The pain of regret is one of the best teachers. Here are eight skills to teach your kids.
Know What Your Responsible For
When they took their kids to the pool, parents Amy and Ling would bring crackers or popcorn from home. At first, their kids were envious of the other kids, whose parents would give them money for snacks. “So sometimes they would bring their own money to spend,” said Amy. “But they soon realized how expensive it was and how they didn’t want to spend all their money on candy or a soda just because someone else was doing it. I never told them they couldn’t—just that I wouldn’t finance it.”
Manage To The Number
Your kids should know how much they can spend on clothing or personal-care items or whatever else before they get to the store. Having a spending limit is healthy. It will help them learn many of the following skills on this list.
Account For Taxes
Having to pay sales tax can be another tough introduction to the real world. One father, Neil, taught his young boys to prepare for it and gave them grace a couple of times when they forgot, but at a certain point he drew the line. “They would go to buy a pack of gum and wouldn’t have enough. The hardest thing for me was not putting down a dime to cover it, but they had to learn. And from then on, they knew I wasn’t going to bail them out. If they didn’t have enough, they didn’t even ask. They just put it back.”
Another example of facing reality is when you realize you can’t buy everything you want, so you have to make a choice. Two inexpensive toys or one more expensive toy? These two inexpensive shirts now or this more expensive one now and that more expensive one next month? COMPARISON SHOP
When Rachel was about seven years old, if she wanted to buy something, her parents required her to get three prices and wait a week. Very often, Karen said, “by the time she had gotten three prices, she didn’t want it anymore. She learned early on that many of the things that were shiny in her mind wouldn’t stay shiny. And she learned that without having to buy them first.”
Cost Vs. Value
Help your kids notice what brands hold up best and which ones tend to wear out or break quickly. The lesson? The lowest-priced option is not necessarily what’ll be least expensive in the long run.
When Possible, Negotiate
When Andrew was eight, he had been saving for a Star Wars LEGO set. One day, we found out that a used-LEGO store had opened up in our town and decided to go. Surprisingly, it had a used version of the exact set he had been saving for, and it was priced much lower than a new one. I whispered in his ear that he should offer even less. So he did, and the store manager agreed. A lot of people are hesitant to ask for deals. Giving our kids some early experience with this can give them confidence.
Jonathan was also into LEGO. When he was six, the company was selling individually packaged figures (“minifigs”) for what seemed like a good price. The only catch was that the packaging prevented you from seeing which one you were buying. From the company’s perspective, maybe it was a good marketing technique, but when Jonathan bought three and ended up with two that were the same, he felt ripped off. So I helped him find a customer-service phone number. When he called, he earnestly expressed his disappointment at ending up with two of the same minifig and went on to suggest that they make the packaging transparent. The customer service rep listened very politely and then sent him a free minifig.
Paper or Plastic?
The other day, Jude took our kids to buy some clothing. When the cashier saw that they planned to pay with cash, he had to call his manager over for help. Apparently, the use of cash is becoming so rare that it requires a special procedure in this store.
We are becoming an increasingly cashless society. For however long as it’s still possible, I like the idea of having young kids use cash. It’s simply more real, more tangible. But eventually, it’ll be important to teach them to use today’s more common payment methods, beginning with debit cards.
There’s no hard-and-fast rule as to what age is best, but we plan to get Jonathan and Andrew set up with checking accounts and debit cards this year while Jonathan is a senior in high school (arguably, later than is ideal) and Andrew a sophomore (probably about right, although a year earlier would have been fine.) We want them to learn to stick to a budget while paying in a more abstract way than with cash, monitor the electronic inflows and outflows, and keep tabs on the whereabouts of their debit cards.
The combination of giving our kids responsibility for new spending categories (such as clothing) and getting them started with checking accounts presents a good opportunity to have them learn how to use online budgeting tools, like Mint. While there will be a learning curve in creating a budget and categorizing expenses properly, since kids grow up using technology, they will figure it out quickly.
Matt Bell is Managing Editor at Sound Mind Investing, a Christian company that helps people invest well and grow as stewards of God’s resources. Bell is the author of five personal finance books and the Matt About Money blog. He has been interviewed by U.S. News & World Report, WGN-TV, Chris Fabry Live, MoneyWise Live, and many other outlets. Bell, who earned a master’s degree from DePaul University, offers video training on biblical money management through Right Now Media. He has spoken at churches, universities, and conferences throughout the U.S. His unintentional reenactment of the Bible’s parable of the prodigal son completely changed his life, opened his eyes to a whole new way of managing money, and gave him a passion to help others manage money well. Matt lives with his wife, Jude, and their three children near Louisville.
Taken from Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management by Matt Bell. Copyright © 2023. Used by permission of Focus On the Family. All rights reserved. Represented by Tyndale House Publishers, Inc.