Use Back-to-School Budgets to Teach Kids Money Management
Back-to-school budgets are the perfect way to teach kids money management.
I know what you’re thinking…. Back-to-school shopping can be overwhelming even for grown ups, so I must be joking. I’m not. Not only believe this to be true I’ve actual tested it out on my four children over the last five years. It’s an excellent tool to teach them money management and you’ll be surprised by how far kids can stretch their dollars. The trick is you set a budget based on past spending and/or a little research and they get to keep what they don’t spend. It’s amazing to see them become very frugal so quickly!
One of my favorite tales of teaching kids the skill of money management comes from this exact experiment. The second year I did this with my kids, my daughters both had about $25 leftover after they had picked out both their school supplies and needed-clothing items. While we walked to the checkout they spotted folding chairs with soft and bright pink fabric that are shaped like a cocoon. They had been asking for them for a few weeks and they happened to be on sale that week, so as we walked by they both insisted on buying their ‘reading’ chairs with their leftover money. Not only was it possible because they used their money wisely, but these weren’t a throw away purchase… and, they still use them today!
Benefits of kids managing their own back-to-school budget
1. Understand costs: Kids don’t really understand money innately, so we have to teach them what things cost. It’s helpful to show them the $40 backpack is using up almost half their money while the (likely just as good) $20 backpack leaves them plenty of money for other needs (and wants). I also like to talk in percentages or fractions when they’re at the right age.
2. Learn how to bargain hunt: I think I’m a pretty good bargain hunter, though to be honest my kids usually teach me a thing or two! One year we even went to three different stores to stock up on their penny or dollar deals when it matched up with the kids’ lists.
3. Evaluate quality of products: I am a big fan of quality products that hold up over time versus throw-away or lower quality items you have to replace repeatedly. That’s why I use back-to-school shopping as an teaching opportunity to pass on some of those values to my kids. The $1 binder may be inexpensive, but it’s actually cheap in quality and it’s not going to hold up to a kid who likes to throw his backpack around.
4. Teach price-comparison shopping: This is super simple with the technology most of us carry in our pockets on our smartphones. A quick search on a few stores’ apps and I can see if there’s a price difference between the same item. In store, you’ll often find a variety of products that are the same for different price points. Suddenly that character-themed $1.50 school folder seems too expensive and they’ll wise up and get the generic version for $.25.
5. Learn the difference between needs and wants: I don’t know how many times I’ve heard I neeeed it, but if I had a nickel for every time I’d probably be diving into my billions like Scrooge McDuck. When kids are evaluating what to buy they will quickly learn the difference between needing something and wanting it.
6. Increased independence: One of the issues many parents face today is how our parenting culture has shifted to being ever present and always able to lend a hand. Letting kids blow their back-to-school budgets or make mistakes will help them gain the independence they’ll need as they turn into teens and then young adults. As kids get older this can become even a more hands off to the point where you drop them off with their own funds (on a debit card or prepaid card preferably!) and they manage everything themselves. It takes baby steps to get there, but it will happen before you know it.
7. Start them young: The more time they spend doing this, the simpler it will become and the fewer conversations you’ll have to have about it. I would recommend starting this with kids around 1st grade, but it’s never too late to get started.
Now that you know how to use back-to-school budgets as an opportunity to teach kids money management, I’d love to hear if you’ve tried it or would consider this approach.
Photo source: Unsplash/ Joe Shillington