Welcome back to another week of how to raise a money savvy kid! Last week, we talked about teaching kids how to budget and this week we’re going to talk about some equally important money lessons. Money mistakes happen to the best of us. Sometimes we may not stay within our budget or we may get a little too out of control with our credit cards. Whatever the case may be, money mistakes happen. Kids can make money mistakes too, but rather than letting the moment pass, you can turn money mistakes into teachable moments.
Money mistakes happen.
You think you’re going to have enough and you don’t. You spend more than you have and then have to go without. You get into debt and then have to scrimp and struggle to pay it off. Money mistakes aren’t fun.
As adults, the consequences of money mistakes can be high. Children make money mistakes, too. The repercussions may be painful for them; however, they’re also valuable teachable moments. Here are some of the mistakes a child might make and some ideas on how to leverage them.
Turn These Money Mistakes into Teachable Moments
1. They save for a toy or item that they want and then have buyer’s remorse.
Buyer’s remorse is a bummer. When your child experiences this money mistake there are a few things you can do to help them avoid this mistake in the future.
You can motivate them to always make sure they really want an item before they buy it. They can ask themselves a few questions like, “Why do I want this item?” “What do I expect this purchase to do for me?” “Is there a better way to spend my money?”
You can also help them return the item. They may not get their full money back but they’ll learn to ask for more from the items they purchase.
2. They blow their allowance right away and don’t have any money to go out with their friends.
Don’t bail them out. Don’t give them opportunities to earn extra money and don’t let them borrow money (this teaches them that it’s okay to go into debt). Let them miss the outing with friends. They’ll be better at budgeting their money the next month.
3. They spend all of their budget on one brand name item.
This happens to most children. They have money to spend, maybe from a birthday check, and they head to the store and blow it all on one item. Many children feel a bit sad when they get home and realize they only have one thing to show for their money. It’s great if you can stop them before they head to the cash register.
Point out a few items that they might like that cost less than the single item they’re buying. For example, you’re at a clothing store with your tween. They have picked an expensive sweater that they love. You point out that they can get three shirts for the price of that sweater and they’ll have more options. They can then at least make a more informed decision about how they want to spend their money.
Children will inevitably make money mistakes. If you’re paying close attention, you can capitalize on these mistakes and turn them into teachable moments. Help your child become more aware of how to manage money and how to stay in control.
What other situations can you think of where a money mistake can become a teachable moment?