Making purchases is a part of our daily life, amounting sometimes to over a thousand transactions each year for the average adult. But how many of these transactions are actually ‘smart’ money decisions? And when it comes to children who are dealing with a very limited amount of money, how can we help them to develop smart money habits that can last them a lifetime? Children have fewer, if any, expenses, so most of their money likely will be dedicated to wants and savings.
As they work toward saving enough money for their wants, parents can help to guide their choices through posing a series of questions regarding the item they want. This set of questions can help a child—or an adult for that matter—to really see if what they are purchasing is going to be of good value, and as Marie Kondo says, maybe even acquire an item that will ‘spark some joy’ for their money!
The Q and A
What item do you want?
How much does it cost?
Do you have enough money for it or will you have to save up
If you need to save, how long will that take you?
How often will you use this item? (Everyday, once a week, or not very often?)
How long will you use it for? (This can help identify if the item has longevity, like a tennis racquet versus a single use item or something they will quickly outgrow).
Is it good quality? (Will the item break easily and end up in the landfill after a week, or will it stand the test of time?)
Do I have something else that can be used for the same purpose? (If they’d like to buy a black shirt but they’ve got a closet overflowing with them, then maybe it’s not such a great idea. If it is a video game or a book they don’t own yet, then that’s a different story!)
Why do you want this item? (The answer might be, “Because all of my friends have one!” And that might not be a good enough answer when they really dig down deep. Now they might say, “Because I’m interested in painting so I want a really good set of brushes.” And right there! You see the difference and so will they…hopefully.)
After the Q and A Session
If, after all of this, they can confidently say that in their mind it’s a good buy, then offer to teach them how to find the best price for the item or how to use the internet to find a used version to save a bit of coin. This shows smart shopping too! Whether it’s Googling a promo code to save 10% or going to a used video game store, it all boils down to modeling the behaviour and attitude that money is valuable and should be used wisely!
Going through these questions can help you steer your children in the right direction, all the while leaving the ultimate purchasing decision in their hands. By posing these thought provokers you’ve at least taught them how to carefully consider what they are doing with their money and eventually, they might take themselves through a list like this on their own. Wouldn’t that be fantastic!
Leaving the Store with Nothing…Ahhhhhh!
Another important ability to practice is leaving a store with nothing if they didn’t find exactly what they were looking for. This can be VERY challenging for young children who just want to get their hands on something…anything. But if they can learn this restraint it will allow them to save their money until they find the perfect thing, making them happier in the end. After all, who wants to spend their money on something that they only kinda-sorta wanted anyway?
Make Being ‘Money-Smart’ a Part of their Identity
If you work with your kids to practice habits like the questionnaire above, it will eventually become second nature to spend at least a little time considering what they are buying before forking over their money to a retailer. What’s even more important is that being ‘money-smart’ will become a strong part of their identity and that has been shown to be the single best method to forming a healthy habit. What you do action-wise is usually an indication about the type of person you believe you are! The mantra for you and your kids must be “I am a money-smart individual (and freakin’ proud of it)!”
Remember, as a parent you have such a great opportunity to teach financial literacy lessons by simply implementing small ideas like the purchasing questionnaire above. We pinky promise, they’ll thank you for it later…it might be thirty years from now but it’ll feel good to hear it whenever!
Want even more tips for teaching your kids about money? Check out the book The Bunnies Talk Money.