Helping Kids Get Smart About Money

Smart Spenders Start with a List

To avoid the scenarios I described in my last post where it is all too easy for kids to spend money they have not earned, start by teaching your kids how to set a spending goal. Ask your child to get a piece of paper and title it “Gotta have it!” This list should be carried in their purse, pocket or wallet whenever they shop. Encourage them to add and subtract “wants” and “needs” from the list for a week.

At the end of a week, take the list out and ask them to prioritize the items on the list. Have them pick the top three things they want or need and place them back on a new “Gotta have it!” list in order of importance. To help them prioritize, have them ask the following questions about each item:

  1. Do I need this?
  2. If not, do I at least really want it and will I still want it tomorrow?
  3. Is this something I must buy now or can I take some time to think about it?
  4. Am I sure that it will get used or worn frequently?
  5. If I buy it now, will I have enough money left to buy the other things I’ll need soon?

Everything that does not pass this test is taken off the list.

Next, talk about what fell off the list. This conversation will help your child understand how having a list helps them manage what they truly want or need before they make a purchase they may regret. Help them set a spending goal by asking them to highlight one item on the list that they would like to earn money toward.

Next, it’s important to provide opportunities for your kids to earn their own money, outside of and in addition to allowance money. Younger kids can help shovel snow, sweep walks and put groceries away when you get home from the store. For older children, that means getting a job, which can be inside or outside the home. This can include babysitting, serving and cleaning up at a family party, driving and running errands or walking neighborhood dogs.

What has happened with a “Gotta have it!” list and a little prioritization? Yep — delayed gratification. By showing your kids how to delay a purchase by making a list and earning the money they spend, we show them how to be a smart spender.

They say that the “best defense is a good offense.” Lists, prioritization and earning the money they spend is the best offense I know of to get our kids ready for the big college game of life!

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