For a couple of months, my 10-year-old son has been saving his allowance, and the money he earns doing other things, up for a specific Lego set extension. (Before he can save up for those types of short-term goals, he pays tithing and he sets money aside in his long-term savings account.) He barely managed to hit the mark recently, and asked if he could get the extension right now. I decided it was time for a learning moment.
Even children need to learn about waiting to purchase something, and the value of patience, as well as the value of a dollar. Plus, I was curious about what he would say when I asked him this question: “Why do you need it right now?”
His answer was this: “I want to spend the money quickly, before I buy something else!” There’s a book fair coming up at his school, and he was thinking about taking some money to buy some things at the fair. But, by his reasoning, if he had already spent the money on his Lego set, he wouldn’t be tempted — and he wouldn’t be set back another week in his attempts to save up for his desired Lego set.
Making Him Wait
While I don’t want to push my son beyond his ability to endure, I did want to teach him to wait a little bit, for a number of reasons. So we talked about why maybe we should wait a few days before buying the Lego set. Here are some of the reasons we talked about:
Do you really want the Lego set more than some of the little trinkets at the book fair? Take a couple of days to make sure that the Lego set is really your first priority right now. Because once you buy the Lego set, you won’t be able to make any purchases at the book fair. Decide what is most important to you, really, before making the decision.
Maybe you should earn a little more money so that it isn’t completely gone all at once. We talked about the importance of having a buffer. Perhaps spending every last cent all at once isn’t the smartest play here. I have a couple things in my home business that my son usually does to earn extra money, and he’ll have another round of allowance in a few days. Perhaps he should wait until he can create a bit of a buffer so that there is money for other expenses that might come up.
This discussion prompted him to decide to wait until the weekend. “I’ve got school this whole week anyway, so I can think about this for a little bit. But I’ll want to make my decision by the weekend, so I have time to play with my new Legos.” Plus, he’s excited about earning some money for helping me out around the home office.
Talk about Your Child’s Spending Decisions
It’s important to talk to your child about spending decisions if you want him or her to grow up and be thoughtful about money. Teaching your children good money habits goes beyond just encouraging them to save up for what they want, and helping them learn about avoiding debt. You also want them to be conscious spenders, really thinking about how they hope to use their money, and whether or not their decisions match with what they help to accomplish.
When your child prepares to make a spending decision — especially a relatively large one — talk about it. Talk about why he or she wants to spend the money, and why he or she thinks it needs to be spent now. These types of discussions can help your child really think about what to do with money, rather than just mindlessly spend. Even if the spending is related to a long-held goal, it helps to talk through it so your child learns to examine money motivations.
Hopefully, our talk results in him learning about instating a “waiting period” for non-essential purchases, to determine how important they are, as well as the importance of creating a buffer so that one purchase doesn’t completely wipe out all of the funds. And, of course, I hope that my son becomes more thoughtful about his spending choices.
Thank you for reading this article on Teaching Your Child The Value Of Patience When Spending Money.
How to Budget: Tips for Teaching Your Child to Budget
How to Teach Your Kids to Save Money
Your kids can learn how to save money easily, especially if you teach by example. Handling money offers people of all ages the opportunity to make effective decisions for their future. The every day spending patterns that you employ can educate, motivate and empower your kids so that they effortlessly learn to become regular savers. Teaching children how to invest at an early age will enable them to be smart about their money so that it becomes automatic that they keep more of the money that they work hard for.
Introduce Money Early
As soon as they can understand how to count, introduce your kids to money. Actively and regularly provide them with information about finances. Use shopping trips as opportunities to teach about money. When you make purchases with them, explain the process. Demonstrate to kids early about planning purchases ahead of time to get the best deals. Show them how to assess value and quality when shopping. Let them participate in transactions so that they understand the give and take system.
Differentiate Between Needs and Wants
Explain to your kids about the value of money by ensuring that they understand its importance. Let them know that everything you have in your house, the food you eat and the things you do, all cost money. Show them the difference between something that is needed, such as food from a grocery store, and something that is wanted, such as eating at a restaurant. This will help them understand that there are choices and alternatives when making decision purchases.
Establish an allowance for your kids. In exchange for chores done that contribute to the family (rather than simply cleaning their room), offer an amount of money that is realistic for them to spend within a week’s time. Give them small bills so that they can easily be shown how to set aside some of it in a piggy bank. Reward kids with extra allowance whenever possible and encourage them to save it for something they want. Design incentives so that they are motivated to earn more to save more.
When your child asks to buy something, explain that they can save for it with their allowance. Show your kids what a savings account is and explain how it grows over time. Demonstrate what a savings bank account can be used for, like emergencies, major purchases and long term savings. Take your children to the bank to open a savings account. Explain how interest works and encourage them to set aside part of their weekly allowance to put into the bank account. For example, if the allowance is $5 a week, suggest that $1 be set aside for savings.
Schedule Money Discussions
Create a regular schedule to have discussions about family finances. Talk about spending in the home, savings accounts and interest earned. Discuss what things cost and demonstrate ways to save money by being careful about things like wasting food and other resources. Use this opportunity to teach kids about differences between cash, checks and credit cards. Demonstrate wise spending decisions and habits. For example, heed warnings on using credit cards liberally and teach them that when used, credit card balances should be paid off monthly before interest charges incur.
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