Kids and Money: Allow Choices to Encourage Financial Responsibility

Image via Image via Flickr/401(K)2013
Image via Image via Flickr/401(K)2013

During vacation at grandma’s we took the girls to a farmer’s market and then to Chuck E. Cheese.

The day kind of went like this. “Can I get a bear claw to eat?” Then, after the bear claw: “I’m so hot. Can I have a lemonade?” And after that: “This orange juice looks really good; can I have a glass?” At the fun place it was, “Can I get a slice of pizza? How about a drink? I really want more tokens!”

Kids and money – it can be a tough concept for them to grasp if we don't take a focused approach. 

When I tried to explain to my children in the scenario above that we had XX number of dollars to spend total, they got frustrated. They didn’t ‘see’ that we had a certain amount of money, and since I was the one spending it, they didn’t even ‘see’ the money go.

So my mom suggested this:

Instead of having to constantly tell them ‘no’ because you already spent money on other things, why not start out by giving them their own money and letting them choose what they want?

“Instead of having to constantly tell them ‘no’ because you already spent money on other things, why not start out by giving them their own money and letting them choose what they want?”

It was like a light bulb went off. Why hadn’t I ever thought of that?!

A genius plan, and the next day I followed it when we went to a festival near my mom’s house. I gave each girl a few dollars and told them they could spend it on what they wanted. When they got to the festival, they took quite a bit of time determining what it was they wanted most: time in the bounce house, face painted, fresh squeezed lemonade. Then they made their choices and were happy with them, and I didn’t have to listen to any more requests for ‘more money’.

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We have been doing this when we go out since, and it works beautifully. Here’s how we have used this approach since to make it work: 

Explain where you are going and how much money your kids will receive. If there are any items they can’t buy, let them know before you go. For instance, when we do morning farmer markets we skip the sweet snacks. If I don’t want the kids to blow all $5 on face painting I tell them before we head to the event

Give the children an idea of what they CAN buy. This might mean snacks, drinks, trinkets and tokens for games. This gives them a little time in advance to consider what it is they may want to spend their money on.

Don’t argue with them once their mind is set on what to buy. Pretend this is their money (because, in a way, it is) and let them make the choice. If they decide to blow all their dollars on a silly plastic toy when you know they may want to bounce in the bounce house later, suggest they wait, explain why, but if they insist let them go. This has been a tough concept personally, for me, to grasp. However, by allowing them the choice I’ve seen how in the beginning my kids were likely to make some choices that naturally lend themselves to learning valuable lessons about money. This freedom lets them learn that money isn’t forever. That once you spend it on something, something better may come along but if they don’t have money they won’t be able to afford it. It shows them they can make decisions, too, and if it is a great decision and they love what they get, they find confidence within that experience and as a result, learn they can be more independent.

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Explain that their stipend is their “budget” and don’t give in to allowing them more. To make this work you have to explain up front that this is ALL they will get, and that once it is gone, it is gone and you won’t continue to make more purchases.

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This can be difficult, but if you want to teach them how to make financial decisions you have to stick with it. If you continue to purchase items after they’ve spent their money they won’t grasp that money, once used up, is gone. If you need to, increase what you give them so they can choose a drink when they get thirsty or a snack if they get hungry.

Do you ever give your children a set amount of money and let them make their financial decisions? What do you do to teach your children the value of money?

What do you think?

Kids and Money: Allow Choices to Encourage Financial Responsibility

Kathy Murdock works as a full time writer and web designer. Recently planted in the middle of the deep south from the busy streets of Los Angeles, when she's not coding Wordpress websites or writing about women in business and thrifty motherhood, Kathy spends time photographing alligators, playing with her family, and running. ... More

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