How to Help Your Children Make Better Buying Decisions

So my some comes up to me and says, “Mom, I have a hundred dollars…Can I spend it?”  Since I am not quite sure how a 7 year old amassed over hundred bucks I said no.  I also said no because I know my kid has a passion for flim flam, gizmos and gimcrack.

Some children seem to be born with a natural money sense that helps them immediately to make smart spending decisions. The other 95% of children need to be taught how to save, and spend, their money. As a parent, it is one of your many jobs to help your children learn about money. It’s not always easy but it certainly is a valuable life lesson. Let’s explore a few tips and strategies to help your children make better buying decisions.

#1 Give Them Cash

When you take your children school shopping, do you wait in line to pay for everything or do you give them cash? Do you set a spending limit? One of the best ways to help children grasp the concept of money and spending limits is to give them a specific amount of cash to spend on school shopping.

For example, if you’ve allotted $150 per child for back to school clothes, give them $150 in cash. You can still hang around and approve the purchases – and you probably want to. However, make them carry the money, wait in line, and pay for their purchases from the cash you’ve give them. Under no circumstances do you give them any more. If they’re short at the end of the day and don’t have enough money to pay for a shirt they just have to have, too bad. This is a teaching moment!

And if they have cash left over? Consider letting them keep it, provided they spend it on stuff for school later.

#2 Make Them Save for It

When your child comes to you and says, “Mom can I have…” consider asking them to save their money to pay for part of the purchase. For example, your child may want a new iPhone or a gaming system. Fine. They can show you how badly they want it by saving up enough money to pay for half. Chances are if they really want it, they’ll save up. And if they don’t want it then you’ve saved yourself some money. It’s a good lesson in how to save and how to decide what’s worth saving for.

#3 Explain Real Costs

Speaking of that iPhone, it’s very easy for a child to place a dollar value on an item and to think in terms of black and white. However, many items – including the iPhone – continue to cost money. One year of data for a smart phone costs around $360, not including the actual cost of the phone. If your child wants a new iPhone, ask them if it’s worth $500 to them. It’s an opportunity to explain the real costs of things.

Children often learn about money by making mistakes. However, as a parent you can help them grasp a broader knowledge of money. They’ll begin to make better decisions and ideally make fewer money mistakes.

Tweet – 3 Surprising and effective tactics to teach your kids how to make smart buying decisions. LINK