Shopping with my 5-year-old involves a complicated set of variables. When his last nap was, whether or not he is hungry, whether I’ve created a carefully mapped itinerary around Target that avoids the toy section… it’s like battle planning. And inevitably, once I get there, I realize I left my shopping list on the kitchen counter.
It’s hard to believe that these same trips to the store could be great opportunities to teach your children some basic financial literacy skills. Well, believe it.
Financial literacy — defined as knowing how money works, how to spend it and how to set a budget — is an important skill for our children to have. (Particularly if we don’t want them sleeping on our couches into their late 20s.) But too many of us wait to start talking about money until our kids are close to being out of the house. Why not start younger?
According to Snowe Saxman, a nationally known financial expert, “more is caught than taught,” and parents should consider the core beliefs their children will be developing about money when they’re little. She herself has started discussing money with her youngest child, who is only 4 years old.
After my divorce, my income dipped significantly, and I knew I’d have to cut back. I didn’t want my son to feel like it was a burden to stick to a budget, so I hit on a few methods to start teaching him the value of money. I’ve tried all of these tricks with my 5-year-old. Not only have they worked, they’ve actually made some of our shopping trips — dare I say it? — fun.
We can spend $50 per holiday for supplies and gifts for others. Whether it’s Easter, Halloween, Christmas or back-to-school (not really a holiday, but kind of a holiday for me), my son knows the amount. We take a special trip to the store, grab a cart and make a game of it. How much can we get for $50? As an added bonus, responding with a simple, “We’ve spent our budget,” when he begs me to buy more sidesteps most arguments and meltdowns. Choose your words carefully, Saxman warns, because you don’t want to “create a lack mentality." Avoid phrases like “never enough,” or “run out,” which could create worry and stress.
Our holiday decorating trip took about 45 minutes. Back-to-school took a half-hour. My son darted around the respective sections at Target considering his options, asking prices and weighing his choices. Should he purchase the double-ended markers or the neon highlighters? We had no other plans that day, so I could respond patiently. It’s important for your child not to feel rushed and to have time to choose what they really want. That way, there’s less likelihood that they’ll resent the budget’s limitations.
When my son wanted to buy a large light-up “Merry Christmas” sign for $12, I grabbed his $3 ornament picks and lined them up on the shelf next to the sign. “Three goes into twelve four times,” I said, “And we only have $12 left in our budget. So do you want the sign or four ornaments?” It’s no different than when our third grade teachers used plastic, colored cubes to teach math skills — except who really cared about the cubes? Our kids do care, however, about Christmas ornaments, school supplies and presents, and will be more motivated to pay attention and learn.
Sales are great for teaching older kids how to calculate an adjusted price. Just move the decimal one to the left to get 10 percent off any price. Ten percent of $20 is $2, for example. Is it a 40 percent off sale? What’s two times four? Eight dollars. Then subtract it from the $20 and you have the item’s sale price – $12. Start with easy percentages — 20 or 50 percent off — and make a game of it. Who can calculate the correct price fastest? The winner gets to pick the next item on the list.
Will my 5-year-old be reciting multiplication tables and doing long division at school after one shopping trip? No, but that’s not the point. I’m trying to teach him financial literacy and comfort with numbers and introduce him to concepts he’ll grasp when he’s older. Saxman says that older children can be given an allowance so they have more ownership of the money they’re managing and learn to wait for more to come in, money management skills that will serve them well in the future.
And even though your child, like mine, might be too young to keep track of the sum of a basketful of objects, kindergarteners and slightly older kids can still do simple addition and subtraction while you keep track of the running total.
When we wheeled our cart full of goodies out into the parking lot after our last trip, there was no resentment about what we couldn’t afford. Instead, my son spent the car ride home pulling everything out of the shopping bags and counting up all the decorations we’d been able to buy for only $50 — a worthwhile investment in more ways than one.
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