Helping Kids Learn Money Management

Michele Borba January 20, 2016 Comments Off on Helping Kids Learn Money Management
Helping Kids Learn Money Management

How to use everyday shopping outings to teach kids money management, financial literacy and sticking to a budget while curbing kid bickering and begging

REALITY CHECK: A study by researchers at the University of Vienna, Austria found that the influence children wield over their parent’s purchase decisions in stores are grossly underestimated. In fact, twice as many store purchases are triggered by kids that their parents are aware. So make sure this season you don’t not back down from your budget.

Let’s face it, tighter budgets make shopping with kids tougher these past few years and many parents are looking for ways to save money and increase value. But shopping for gifts for friends and relatives, school supplies, groceries, clothes and just weekend needs  is also a great and often missed way for kids to learn important life long spending habits. All it takes is a little parent planning and organization and by emphasizing the right lessons during those shopping sprees. Those are the times we can help kids become smart spenders and even stick to a budget. And sticking to a budget is a learned character trait: call it frugality, patience, and self-control-the same traits our children need to thrive in the real world.

Here are 10 tips that help keep that spending down, curb the kid bickering and begging, as well as teach your kids money management whether it’s for back to school shopping, taking the kids out to purchase holiday gifts, birthday presents, groceries, or just a regular shopping spree. 

1. Take a home inventory of reusable items and what still fits

If you have one of those ,” I have to have it!” type kids, then it’s helpful to have them see you prioritize and set of list of what is really needed. Have them watch you go through those closets and drawers (yours and theirs!). Check out the homework bin and the bottom of their backpacks. Pull out the calculators, pencils, rulers, glue sticks as well as socks, shirts, and shoes.

What do you already have that is still in good shape and can be recycled or passed down to another sibling? You’ll be surprised how many items are usable or can simply be spruced up with a sticker or a little bleach.

2. Involve your kids

Now is the time to discuss the difference between “needs vs. wants” and let them know that this year there will be a budget and they will need to stick to it. Find out what is on the top of their “want” and “need” list. Such discussions help reduce those impulsive “just gotta to have it” shopping habits. Even kids as young as 6 -even preschoolers-can benefit from those money discussions.

3. Establish a set budget

Next, set a budget that works for your family and share that with your kids. Explain that you need to cut back from last year and that spending may not exceed the budget. Now create a shopping list based on wants not needs to help prioritize spending. And cut the guilt! Surveys find that clothing is the top items parents say they are spending less on.

4. Announce clear rules for clothing and apparel buying

Set a limit on stylish “want” items and a clear dollar limit on nonessential items. Stress that anything beyond that amount must be purchased out of pocked by the child. Then if your child insists on that pricey purse that’s beyond the budget, encourage her entrepreneurial spirit to set up a lemonade stand, mow the law, or babysit for the neighbor next door but keep your wallet shut. (Hint: If you’re shopping for school attire, do check the school rules about clothing and apparel).

Any request that deviates from those rules is an immediate, “No” and will save on the bickering. And encourage your child to buy clothing in solid colors. Items will mix and match more. If your kid needs a backpack, buy now to get the best deals of the year.

5. Have each child create a list

Start by reviewing together the list of required back to school supply list or the wish list for this month. Encourage him to  create his own list. Even younger kids who can’t read can cut and paste pictures from penny savers or catalogues onto index cards and then carry them to the story. It’s a great way to keep children occupied and also match words and pictures to products. Making a list has helps kids prioritize, be more likely to stick to a budget and reduces impulsive spending urges once in the store.

6. Be a bargain hunter and wait for sales to shop

Get your kids involved in checking those penny saver deals. Have them clip out those coupons.

~ Use advertisements to teach kids how to save money on wished for items. Saved money can go toward non-essential items.

~ Encourage kids to check out dollar stores for paper products (especially paper bags for packing lunches) and school supplies.

~ Hit the outlet malls, and don’t overlook thrift stores and even garage sales. 

~ Don’t give out those supplies all at once–keep “extra” items in a basket or box ready for homework needs. You can then replenish the goods as your kids need them.

7. Make just one shopping trip with the kids 

Choose just one store that has the best bargains to take the kids (like Wall Mart, Target, Office Depot). Doing so will reduce shopping time and increase your savings. By announcing, “We’re shopping only at this store,” the kids are forced to look for the best bargains in one place and you won’t find yourself driving to multiple stores (and bringing back multiple items).

8. Make kids responsible for their own list

Researchers found that when kids touch an item in a store they’re more likely to want to buy it. So make sure each child holds their list as they shop. (They can hold a pencil in their other hand and mark off each item as found to keep their other hand occupied). The child should also mark each item off his list as he places it in his own cart.

A younger child can carry a few index cards with the glued pictures from the Penny Saver ads to match items on shelves and put them in her shopping cart. Suggest that an older kid keep a running total of purchases (using a calculator, cell phone feature or good old pen and paper) to help ensure he sticks to that budget.

9. Do comparison-shopping and teach money lessons

Once in the store, start by choosing an item that may have price variations. Show your child a few similar products and the corresponding price tags so they compare price differences and how they can save. Your child must decide which is more important: the item’s price or style.

10.Make sure your child goes to the register

The shopping process isn’t complete until your child goes to the check out. This is when he learns to make those tough fiscal decisions and the importance of sticking to a budget. And if your child is over his limit, make him decide which unnecessary items to remove. It’s also a great learning activity to have him check the receipt once the shopping is done.  Once home, make sure your kids write their names on each item with a permanent marking pen. Regardless of how great the deal, the next lesson is to teach your kids to be responsible for their supplies.

The truth is we can begin to teach our children money management skills as early as three and four years of age, and those lessons don’t have to be difficult. In fact, the best way for kids to learn them is by taking advantage of those simple everyday real life moments like watching us at the ATM machine, paying our bills, balancing our checkbook, deciding our money budget, talking through our spending decisions or back to school shopping.

Those lessons will take a bit more patience and persistence, but learning positive spending habits, financial wisdom, and good money management skills are crucial for life.

Best! Michele

Dr. Michele Borba, Parenting Expert

Tips from this blog were adapted from the chapter on Money Management  in my book,  The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries. I shared also shared with on the TODAY Show with Al Roker.

You can also refer to my daily blog, Dr. Borba’s Reality Check for ongoing parenting solutions and late-breaking news and research about child development.

My latest book is UnSelfie: Why Empathetic Kids Succeed in an All-About-Me World. It is chock-full of practical strategies based on the latest science to help raise compassionate, caring, morally courageous, collaborative children who care about others and think “WE” not “ME.” These are the skills they need to thrive in the complex, global new world.

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