Teaching Kids to Be Smart Spenders for Back to School

Michele Borba August 14, 2012 Comments Off on Teaching Kids to Be Smart Spenders for Back to School

Parenting advice to help kids become smarter spenders, stick to a budget, and learn the value of a dollar

Do you sometimes feel like your kid’s ATM machine?

Do you worry you may be giving your kid an allowance when he’s forty-five?

Does your child spend faster than he saves?

If so, you’re not alone.

Financial literacy and knowing the value of a dollar (or a good deal) appears to be a subject many of today’s kids are failing. In fact, 180,000 U.S. kids aged 18 to 24 declared bankruptcy last year because they never learned basic money management skills. Among unemployed Americas ages 18 to 29, Angela Wu of Newsweek reports that “more than a quarter are behind on mortgage payments and this group also has soaring credit-care debt and bankruptcy rates.” What’s more, fewer than half of parents surveyed said they teach their 11 to 14-year-olds how to keep track of their expenses or set a budget. Many schools are realizing just how many kids are flunking money management. And that’s why the number of states requiring high school students to take a financial-literacy course has doubled since 2007, to 13.

One thing most financial advisers suggest: Parents should be speaking to their kids about money — and a lot sooner.

I shared a few tips with Al Roker on the TODAY show on ways to help our kids learn to become smarter spenders. Here are tips that help teach your kids money management, but maybe even stick to a budget. And there is no better time to start these conversations then during those back-to-school shopping sprees.

10 Tips to Help Kids Become Smarter Spenders

Start Early

New research shows that kids learn attitudes about money at any early age. By three to five years of age kids have already determined whether they are “spenders” or “savers.” So start those conversations when kids can count to ten. The first step is to give out those piggy banks. (Baby food jars make perfect banks for younger kids because they can “see” their money growing). Set a rule that “We save our money before we spend it.”

Be a Good Example

Our kids do watch our example, so be careful of what you model. “I just have to have that dress!” doesn’t help your kid learn to be a smart spender. Better examples that sink in are: “I’m going to wait for the sale.” Or “I need a washing machine, but I’ll start check the consumer reports for the best value.”

Teach  “Wants vs. Needs”

This is the “Gotta Have It NOW Generation” so a big step in helping today’s kids learn to be smart spenders is to teach them the difference between “want it…” vs. “need it.” Start by having your kids take an inventory of their closet before you go out shopping for more. Pull out those socks, shirts, and shoes together, and then turn the drawer and closest cleaning into your first money management lesson. Clothes that are torn, faded, or don’t fit become the “needed” replacement items (“You need new socks…they have holes in them!”) Then when your daughter says she has to have a new pair of designer jeans (when last year’s pair still fit and are in good shape), that becomes a “want item.” Do the same with all those school supplies. The trick is to get your kids to assess what they already have that is still in good shape and can be recycled. What’s missing and really needed is on the “need” list. Now your kids can create a shopping list based on real needs not wants to help prioritize spending. And any want item can be purchased from your child’s own funds.

 Set A Budget and Pass It to Your Child

When shopping for back to school items this year set a budget that works for your family and then share that amount with your kids. (And if you’re cutting back, reduce the guilt: surveys find that clothing is the top item parents say they are still spending less on again this year). Older kids can start doing the math to figure out if their “want” list is realistic. It usually forces them to start checking online and newspaper advertisements for better deals.

Have Each Child Create a Prioritized List

 Now have each of your kids make their own list of school needs. (Start with the school’s required list. If you haven’t received “the list,” check your child’s school’s website).  Even younger kids who can’t read can cut and paste pictures from penny savers or catalogues onto index cards to create a list. Making a list has helps kids prioritize, be more likely to stick to a budget and actually reduces impulsive spending urges once in the store. And if your child carries a list in her hands, she is less likely to buy impulsively. A study found that once a child touches an object she is more likely to want it. So keep your kids’ hands occupied in those stores.

Help Your Kid Become a Bargain Hunter 

Get your kids involved in checking out those penny saver ads. Have them clip out coupons. Use advertisements to also teach kids how to save money on required school supplies and compare prices. Tune your kids into the bargains at those dollar stores. Hit the outlet malls, and don’t overlook thrift stores and even garage sales. And tell them to watch for sales!

Don’t Back Down from the Budget

 A study by researchers at the University of Vienna, Austria found that the influence children wield over their parent’s purchase decisions is grossly underestimated. In fact, parents say that sixty percent of their shopping choices are kid influenced. And boy do kids know our weak points! Studies show that the average kid nags us nine times for a product – and at the ninth whine we throw up the white flag and give in. So don’t! Once your kids figure out that your “no” really doesn’t really mean no, there goes your moment to make them stick to that budget and become smarter spenders.

Do One Store Shopping to Boost Consumer Skills

Consider choosing just one store that has the best bargains to take the kids this year (like Wall Mart, Target, or Office Depot). 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).

Do Comparison-Shopping and Teach Money Lessons

Once in the store, start by choosing an item that may have price variations. Show your kids a few similar products and the corresponding price tags so they compare price differences and learn to think through which is a better value. You’ll also find that kids will become more tuned into comparing deals within that store (which of the two backpacks or calculators is a better value) because they can line the items up next to one another and check out “outside” colors and design as well as “inside” stitching. Older kids should turn the package over and compare the contents.

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 purchased clothes and supplies.

Dr. Michele Borba, Parenting Expert

For more parenting advice follow me on twitter at Michele Borba or on my daily blog, Dr. Michele Borba’s Reality Check. My upcoming TODAY show segments or media appearances are listed on my homepage, Michele Borba. For specific parenting advice refer to my latest book, The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries or my other 22 publications


[i] N. S. Godfrey, Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children,

[ii] 11 to 14 year olds not taught to track expenses of budget: 2001 survey of parents by the American Savings Education Council in Washington, D.C.  S. Garland, “Mom, I Need Money!” Parents, May 2002, p. 193-194.