Teaching Your Kids About Spending
If your kids pull in a big haul from the holidays, they may be ready to spend it faster than you can say money doesn’t grow on trees. In our last article in a series on teaching kids about money, we’ll share wise spending habits. Read our other two articles on saving and giving.
Spending on Wants vs. Needs
Spending money falls into two categories: wants versus needs. Learning to separate spending into these two categories before their money is gone will help your kids develop smart money habits. When your child asks for something new, decide together if it’s a want or a need. Start lists for both categories, estimate costs, and then list them in order of importance. Demonstrate how it’s better to spend their money on the things they need and can afford before buying things they want, like a new toy or video game.
For older kids, you can make a simple register or chart that shows where they spend money each month. Write down how much goes to necessities, like food. Then subtract to see how much is left to spend on things they want, like going to a movie or a new game. Decide together which activities they’d like to spend the extra money on or consider if they should save up for something big.
Save Up to Spend
If your child is eyeing an expensive item that falls into the “want” category, teach them to save for that item, but make sure they understand that they shouldn’t spend all their savings on one item. Explain that it’s vital to always keep some in savings for emergencies.
It’s easy to build savings with our Dollar Squad savings accounts. Dollar Squad Accounts earn interest, and your child earns a Squad Dollar for every dollar deposited on fun prizes in the online store.
When they get ready to spend, help them shop smarter by looking for discounts, coupons, or sales. However, help them to not buy something they didn’t plan for or don’t need simply because it’s on sale. It can be easy to be swept up in a deal that sounds too good to be true, so give them a little time to weigh the options to avoid impulse buying.
Another way to help their money go further is to shop at thrift stores or other reuse shops. Ask neighbors if they have gently used items they’re about to toss. Learning to use what they have is a great way to keep spending down while saving for any new purchases.
No matter what age your kids are, it’s never too early to start smart money habits. In addition to Dollar Squad, Texell also has thr!ve accounts to help teens plan their financial journey. Visit Texell.org/Youth to learn more, or you can schedule an appointment at any branch to open an account today.
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