Now that kids know where the money comes from, it is good to discuss where it goes. Spending is a big chunk of financial literacy.
Here are some things you can teach your kids about spending money:
- Look at the price tags (especially in the toy store)
As early as the kids can recognize number, teach them to look at the price tags of items in the mall or the grocery. They need to learn the concept of what is expensive and what is not. Of course, this concept is subjective. An expensive item for one family may not be expensive to another. This will depend on the family’s spending power.
When my children go to toy stores (scary place to some parents!), we usually have lengthy discussions about money. In the toy store, they learned early in life that they cannot get everything they “want”. They also learned to look at the prices of the toys. I even went so far by telling them how much rice 500 pesos can buy. The 500 pesos that they want to spend for the toy (which I refuse to buy), can go a long way for some families.
- Spend within the budget
Aside from the school allowance, you may give you kids money to spend on anything they want. With my kids, we had a monthly ceiling on how much they can spend for toys, App Store buys, books or sometimes candies. Once they reach the ceiling, they have to wait for next month to be able to buy again.
Children develop self-control when they are given the opportunity to decide on their spending. They cannot buy what they want, when they want it. Most adults fail in this area. When it comes to spending, we all need to practice self-control.
- Nothing is free! Please turn off the lights…
Knowing that money is used in almost everything we consume and do everyday makes a big difference in our children’s spending. Every time they turn on the AC, the electric meter starts running and electric bill is rising.
If your kids are big enough to own a smart phone, download the Pocket Money Manager available in the Apple App Store.
- Do not spend all your money!
When your children want something, teach them to SAVE for it! They should not be spending all their allowance in school.
The entire family can plan to save for a trip to Disneyland. Every member can contribute. Children learn more when they become part of the family affairs and money matters. Learning about money is more meaningful this way.
How do you spend your money?