“Mom, can I buy something?”
“Do you have money?”
“No. But I promise to pay you back when we get home. Please, OH PLEASE?!”
“Why don’t you take a look first before you settle on something. Your limit is $1 plus tax.”
She walks up and down the aisle, digging through the bins and touching everything she might have interest in. I can just see the imaginary dollar burning a hole in her pocket. She picks up a pack of erasers and tells me, “Mom, I’m not sure that I want this yet, but I’m holding on to it to see if I can find something better.”
(Ugh, I’m going to have this conversation AGAIN.) “You know you don’t have to buy something because you have a dollar.”
“But I want to.”
“But you don’t need it. You have enough erasers at home that will last you through college! Do you realize that the pack of erasers is like recycling 22 water bottles? By not spending the dollar, you have just saved it for something possibly more important the next time you need money.”
She sets the pack of erasers back in the bin, we check out and leave the store. My daughter is grumpy on the way home because she didn’t spend her hypothetical “dollar.”
So what, it was a dollar — I can afford it. I’m not a mean mom. I want to provide for my children’s needs and enjoy getting them gifts every now and then. But not all the time. Not to mention, I don’t want all this “junk” laying around the house. We don’t do allowance. We live comfortably and can afford whatever my kids want but we still want them to know that it takes work and responsibility to be where we are in life
Instead of just saying, “money doesn’t grow on trees,” my husband and I take the effort to teach our kids about money and frivolous spending.
How We Teach Our Kids About Money
- Put them to work. They recycle our collection bottles and cans that have a redemption value about every other month. And it’s not the “weigh-in” kind of recycling, it’s the kind where you have to put in the bottles and cans ONE. BY. ONE. (You actually get the redemption value back from those.) If you can imagine, it takes a lot of patience for a seven year old to wait in the line, let alone empty two large trash cans full of recyclables. You get dirty and it stinks but they will never forget the effort.
- Put a “work value” whenever money is spent for their wants/needs. ”Oh, you got a hole in your shoe after we just bought them a month ago? Do you realize that it takes 600 bottles and cans to pay for a new pair of shoes? That’s half a year of saving bottles and cans! Next time, be more responsible and take care of your things.”
- Teach value over price. I let my kids choose an item off my grocery list. I have them read the “per-ounce” or “per-unit” price of the different brands/sizes of product and choose which is a better value. It helps them understand that even if the small jar of jelly cost less, the larger jar is a better value since you’re paying less per-ounce for more product (which you know you will use anyway). It also helps sharpen their math skills when there is no unit price stated on the price sticker.
- Encourage entrepreneurship. When the kids want to do a bake/craft sale, we factor in the amount of work and price of ingredients/materials into their profit margin. They have to decide what to charge for their products to make a profit and if it would be a fair price to the customer.
- Educate them about credit. It’s NEVER too early. They understand more than you think. Put it in terms they can understand: “Pretend I’m a credit company. Because I think you’re responsible, I will ALLOW you to spend MY jar of 100 pennies. You can use it as you wish, but at the end of the month, I need 100 pennies back in MY jar. If you can’t fill the jar back to 100 pennies, you will need to fill the jar to 120 pennies. I will take the extra 20 to keep and you will still have the privilege to use the 100 pennies again.” You can go into why companies charge interest if they’re ready but the idea is to make them realize that the money is not theirs and has to be used responsibly and paid back on time or else there will be a penalty.
- Don’t forget the tax! That $1 purchase is really $1.09. Why tax? Keep it simple (no political bias). We pay tax so that our roads and streets can be maintained and so that our police officers can protect us.
- Teach them about charity. I don’t intend to raise my kids to be misers. It’s very hard for kids to just “give money away.” But give them the opportunity to help and you’ll be amazed. Last year, my daughter saw that her 1st grade class needed money to do more activities. She came up with the idea to do a bake sale on our block. She raised over $100 and the gratitude that was expressed by her peers and their parents was priceless. She felt good about what she did and that was worth more than having dollars in her pocket.
My kids think-through their purchases now. Even if it is some junky tchotchke, they try to get the best value. When we shop, they’re quick point out the “good deals” to me. It also makes shopping a bit easier when the, “Mom, can I buy something?” question comes up.
Got tips on how to teach kids about money and budgeting? Share your experience in the Community.