Monday, July 7, 2008

Teaching Children About Money - Part 4 - Spending

So children spending money, right? Sounds like an easy thing to teach. The easy part is the spending, as everyone seems to be born with an natural ability to do this (or quickly pick it up from mom or dad). The hard part is purchasing responsibly with their money.

This can start even before they have a concept of money. Teach them to make choices. For instance, when we are reading to Patrick at night, he makes choices quite frequently. We tell him that he can only take one toy to bed or that we can only read three books (if he is going to be late) or that we can only sing 2 songs. This forces him to make a decision based on what he likes best. He can't have it all, but he can choose his favorites. The same applies to shopping. If we decide that he's going to get something when we go shopping and he picks out two things that he wants, he has to decide which one he will actually go home with. It's not complicated. It teaches him that he cannot have everything and eventually it will help him make wise shopping decisions.

Use this same principle when taking them to spend their own money. It's funny how children are much more particular about how they spend their money than when they spend yours. We are not much different from them in this aspect, as we can see with this country's debt problem!

As they get older and are making more money, whether through allowance, chores, a job, or all of the above, set up an agreement with them on what you will provide vs. what they will use their own money for. For instance, you will buy them one pair of sneakers and boots or sandals for a school year. If they want any other shoes, they can purchase them with their money. That includes the ones you buy them getting worn from poor maintenance/rough play or just because they want the latest and greatest fad. They can purchase gifts from their own money for Christmas or Mom's/Dad's day. You can set up the "Special Jar" for this if you want. Encourage them to make gifts instead of buy and you will get much more heart-felt gifts and they will learn the value of their money. If they do insist on using your money, apply the credit lesson principle learned in Part 1 of this series and charge them interest. If they want a new video game, they can spend their spending money on that...not is going in the bank each month, remember?

So, although we don't have to worry about teaching our children how to spend money, we do need to teach them how to spend it wisely.

To read Part 1 - Credit, click here
To read Part 2 - Giving, click here
To read Part 3 - Saving, click here

Photo credit: {© gisela}

1 comment:

  1. This is a GREAT post; I read as many of these as I could when my kids were little (and still do). In this credit-card world, it's so important to teach our kids about choices, and responsibility with money (and other things). It sounds like you're doing a great job with the little guy.