When it comes to teaching children finances, a ton of focus is on how to save money. There are piggy banks, kid saving accounts, games and lessons that all focus on just how to save money.
Which is great! Knowing how to save money is a very important lesson. By knowing how to save money, they set themselves up to succeed in the future.
But equally important is teaching your children how to spend money. It might feel like they have that part down, but just like knowing to save money, knowing how to spend money the right way sets your child up for success!
Just Because You Can, Doesn’t Mean You Should
When kids get money, their mind starts running about all the things they want to buy with it. Snacks, drinks, toys, games, anything and everything is within their wishes with the five dollars in hand. Their impulse to buy is strong when given the tools to do so.
One of the most important lessons you can teach is that just because you can buy something doesn’t mean you should. For example, just because they can buy a candy bar with the money they got doesn’t mean they should.
To help teach this, encourage saving up for a specific item or to reach a savings goal. Another approach is to show them the benefit of buying for the short term vs the long term. Don’t buy the candy bar, but instead buy the toy because the toy will last longer.
Don’t Buy The First Thing You See
Let’s say you take your children to Disneyland and tell them they get $20 to spend on a souvenir. As you move through the park and look at the many different stores, your kids' eyes will pick out several different items they want. They’ll come rushing up with a toy, hat, or shirt they want so bad. Let's say they buy it, only to find a different item later on they want even more, but already spent the money.
Teach your kids to be patient when making special purchases and to see all the options they can. That way, they learn to make educated purchasing decisions so they are happiest with what they get. That way, they spend the money on the item they really want rather than the first one they find.
Spend Only What You Have
By teaching kids to spend money, it introduces natural barriers of money, like only spending what they have. This is a great lesson to learn in a protecting and controlled environment rather than one to learn as an adult, especially once they have access to credit cards.
Teach your child they can only spend what they money for. If something costs $15 and they only have $10, they aren’t able to buy it. If they plan on buying two things, but only have enough for one, they have to pick. This helps reign in impulse spending, helps make decisions, and instills the idea of only buying things they can afford.
Shop for Deals
While it will take extra effort to do, help your kids shop around and find the best deal. Don’t just go to Target and buy the item right there, go to many different stores, find coupons, look online, whatever it takes to save some money. Have your child do the work for it, but be there for advice.
This can teach that prices are different at different stores and you can save a good amount of money by putting in some extra effort.
Get a Youth Debit Card
As they get a little older, teach them how they’ll be spending money for most of their life, using a debit card. Cash is great to give a physical representation of money for them to count and touch, but with a little age, get them a card.
This will teach them how to buy using a card and keep track of their money through digital means. That way they know how much they have left and keep that mental reminder with them.