Kids love to spend money, don’t we all?

We all love to spend money right? So do our kids. Spending is part of our ‘’give, save and spend’’ formula and kids like this part of their budget. My boys love it when its allowance day because they like to visit the toy store to buy something. I want to make an important point here: spending needs to be a fun activity! As long as kids understand that they need to save and give first, and that money is limited, let them buy a toy or something they want. They need to derive joy from spending in a responsible way – having peace of mind that when they do spend they have already saved and shared. My kids are younger and are happy with a toy soldier or ninja turtle, but older kids may have more expensive taste and will need to save for that special purchase. But when they have enough money and can then purchase that item, celebrate the event with them. They will remember how good it felt to buy the item after saving up for it and this will motivate them to do so in future. Spending is good but has to be balanced and healthy. Some important points relating to spending:

  • It’s equally important to save and spend wisely! Let your kids enjoy their spending, but blowing it all on sweets is not healthy or wise. Wise spending includes making healthy choices. Spending has to be associated with fun but also with wisdom and balance.
  • There are always teachable moments (when spending money). I let my boys buy their own toys and they take out their own money and pay for it at the till point. They count the change and experience shopping. Do some comparable shopping when kids are older. What does the toy cost at this store vs. that store. For older kids (9 to 12) do a bit of a debrief after the shopping. Ask them:
    • Do you think it was worth the money?
    • Was it worth the effort involved in earning it and saving for it?
    • What did you enjoy or dislike about the shopping experience?
    • What, if anything, would you do differently next time?
  • Spend according to a budget. I did mention this before. Determine allowance according to a budget. They need to still have money left for tuckshop for the next few weeks, so spending all the money now will mean they can’t buy something later.
  • Keep a log to monitor spending. I usually count the money spent and we calculate what is left over. When my kids are older, we will be doing this more scientifically e.g. keep the slips and add up the expenditure per category of spend. We will monitor how the allowance is spent by keeping a log. I hated accounting at school and one of the reasons for this was that it was not real to me. They talked about invoices and credit notes and because I was a kid, I was not exposed to these concepts / documents. We need to expose our children to budgets and accounting principles as soon as possible. It has to be real to them
  • Let them make mistakes and bear the consequences. Kids need to realise that when spending money; their choices have consequences. I know this sucks, but let them cry and moan when their money is finished. We had one or two tantrums in shops when my youngest threw a fit when the older one bought something and he could not. He had spent all him money. You live and learn by experience. Better to have them cry when they are young and not at 30.
  • Differentiate between WANTS (luxuries) and NEEDS (necessities). We all fool ourselves don’t we. We can all justify something we want as an absolute need. Kids need to learn the difference. Herewith a great game for a rainy day: Get a piece of paper and make a list of everything the family can’t live without (e.g. food, home, clothing). You may have some lively debates about what is and what is not a necessity! But this game will give your children a good idea of what your family has to spend on first as a necessity and will help them see what is essential and what is the nice to haves in their own lives.

A dude called Syrus Maxims said: ‘’Money should be mastered, not served.’’ Kids need to find enjoyment in spending in the right way. I think we adults have a lot to learn still in this department. Unless we have some kind of budget and track spending against a budget, how will we know where we stand financially? Your children need to learn to give, save and spend. We need balance in life. We can’t be saving all our money and living like a miser. Someone once said ‘’I have never seen a trailer attached to a coffin’’. It’s true, we leave this life as we entered it, with no material stuff but our birthday suits. Kids must know how to enjoy their ”hard earned” money and this is done by spending and enjoying it (responsibly).

Authored by Andre Peters via the youngeblog