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Money and Kids: Teaching Kids to Spend
By JLP | January 16, 2012
Do your kids know how to handle money?
As parents, we know our job is to train our kids. We teach them to behave in public, to study and get good grades, to contribute to society. One area we sometimes neglect is teaching them about money. I’ve identified four main areas that I want to teach my kids about money: Earning, Saving, Giving, and Spending. (As they grow, they need to learn about long-term planning, investing, borrowing – more complicated financial issues – but until they have these basics down, the more complicated ideas won’t have any meaning for them.)
Since it’s been the primary thought on my mind recently, I decided to tackle the “spending” category first: We need to teach our kids how to spend money.
It sounds silly to say we need to teach our kids to “spend.” That should be the easy one, right? What they need to learn is how to spend money wisely – so they can feel confident about what they’ve bought, enjoy their purchases, and avoid problems down the road.
There are many methods to do this, and many mistakes to be made along the way. A major mistake that I find myself making is continually telling my kids not to spend money: “That toy is cheap, it won’t last.” “Those shoes are too expensive.” “No, the baseball card that your brother is trying to sell you is NOT worth $10.” Sometimes I forget to teach my kids how they should spend their money: how to look for a good deal, save money for a goal, and enjoy the purchase.
Children have a pretty limited avenue from which they get money – that deserves a whole post on it’s own. Suffice it to say that, since they have such a limited income, it’s a good time for them to learn how to carefully spend that money – before they are dealing with larger amounts of money and making bigger decisions. (Small decisions can equal small successes – or small mistakes. Big decisions can equal big successes – or even bigger mistakes.) If they learn these lessons now, they will be better money managers as teenagers and adults.
In our family, we teach our kids to give and save before they spend. After those two things have been done, they’re free to spend the balance of their money as they will. This is difficult for Mom and Dad! We generally do NOT like the stuff they choose to spend their money on! For example, they LOVE the silly arcade machines at our local Pizza Hut. Every time we eat there (which is not very often), they get out all their money and see how many games they can play. It really bothers me to see them waste their money like this, but I have to keep reminding myself that they’re children – they have childish desires. I go ahead and let them spend some of their money on it. (I don’t, however, let them spend tons of money – which isn’t usually a problem because they rarely have tons of money.)
They also like to spend their money at the concession stand during baseball season. This is a combination of the opportunity to get candy and soda AND just plain boredom. (If you’ve ever been to a 6 year-old’s Little League game, you know exactly what I’m talking about.) Our kids keep the Little League concession stand in business from March to May.
They have learned some hard lessons, and some good ones. Seeing a sibling buy a $180 iPod can be difficult for a younger child to handle. They have to be reminded that they can have one, too – but only if they don’t spend their money at Pizza Hut and the ball field. The “instant gratification” desire of a 6 year-old doesn’t just go away on it’s own. It has to be disciplined – sometimes through painful experiences.
As a Mom, my initial reaction to any of those painful experiences is to fix it for my kids. But when I step in, I take away the opportunity for my children to learn an important lesson: If you spend your money on one thing, you won’t have it to spend on another.
A few things we have tried over the years that have worked for us:
Take Advantage of Short Attention Spans
There are lots of things that kids want right now. If you can wait them out long enough, they often forget about them. One thing I do with my kids is try to subtly divert their attention from that thing they want to what they would enjoy about having it. When my son says, “I want those blendy pens from television,” I’ll ask him, “What would you do with them?” We start a conversation about the things he would color, what he could create, the fact that he could not, in fact, color the walls in his room, and before long he’s completely forgotten about the original thing he wanted. He’s caught up in the fun of imagining and creating.
Let Them Dream
It’s hard for a kid to go to a store and not be able to take anything home. (Sometimes it’s hard for adults, too…) Kids don’t understand “We’re just shopping.” In the middle of one particularly stressful shopping experience, I pulled out my phone and started snapping pictures of everything they said they wanted. Every time they said, “Can we have that?” I took a picture of it. Without me saying anything (no lecturing, no fussing), the kids’ attitudes quickly changed from, “Mom, can I have…?” to “Mom, take a picture of this one!” When we got home, we looked through all of the pictures, and they enjoyed imagining what they would do with them. We didn’t buy any toys that day, and no one cared.
Teach Them About Amazon.com
This is obviously not appropriate for all ages, but my 10-year-old is starting to understand that you can buy things on the internet – and you might be able to find a better deal! He’s learning to research his purchase online before going to the store. I’m also trying to remind him, when we’re shopping, that we can check Amazon when we get home to see if we can find the item for a better price. (My phone also has the Amazon “Flow” app, and we can often check the price on Amazon right from the store.)
This serves two purposes: It’s teaching him to find the best deal on what he wants, and it’s also teaching him delayed gratification.
My husband & I learned some of these lessons too late, and we are having to work very hard to recover from bad decisions. My hope is that our kids will grow up with more information, and more practical understanding, about fiances so that they can make better decisions from the start.
Obviously, my kids are younger. If you have older kids, what have you done to teach your kids about finances? What worked – and what didn’t?
Topics: Kids and Money | 7 Comments »
January 16th, 2012 at 2:48 pm
Part of the amazon teaching should include a lesson about buying locally too.
January 16th, 2012 at 2:51 pm
Oh, and if buying through amazon: how to submit the use-tax paperwork to your state (unless you live in one of the five states without a sales tax).
January 16th, 2012 at 7:41 pm
Interesting…. I love the one about taking a picture (instead of making the purchase) and then having fun with the photos later.
Slightly off topic, but I got dragged into the flagship American Girl store near Rockefeller Center with my little nieces during the holiday season.
All I can say is OMG!!!!
There are powerful forces out there employing armies of brilliant marketing folks with the singular task of turning our children into little auto-spendng machines.
I had no idea what parents are up against these days.
January 17th, 2012 at 11:16 am
I STILL play the shopping around game to get me away from a purchase. By the time I’ve checked a few places, I will have completely talked myself out of an unnecessary purchase.
January 17th, 2012 at 12:18 pm
Miguel,
Yes, there are dark forces out there trying to separate parents from their money.
January 17th, 2012 at 10:00 pm
I’ll confess…we bought an American Girl Doll for my daughter for Christmas. The doll itself cost a pretty penny, but where they really get you is the accessories. Oh, and in Dallas, you can take your doll to lunch and to the “spa.” Seriously?
Some of those “dark forces”:
http://www.downswithdebt.com/best-marketing-schemes-of-2011/
January 19th, 2012 at 12:48 pm
I ask family to give cash to the boys at gift-giving occasions, unless there is a book or something else they have their eye on. To give a giftcard forces them to spend (I often buy them from them so they end up with cash anyway.)
With cash, they can choose to spend or save, hopefully the latter.