Should We Save our Kids from Consumer Mistakes?

kids moneyIf parents do not teach their children money management basics from an early age, it is likely that many entering their young adulthood will do so with debt issues and credit problems. One method parents often elect to use to teach kids about life is to let them make mistakes on their own and learn from those mistakes. This may be a wise move for teaching matters of money as well.

Children are often the target of marketers. It is easy to merchandise to the young because they in turn are good at convincing parents to buy. But what if kids are left to their own devices when making consumer decisions?

Here are some tips to letting kids make their own consumer choices and mistakes to teach real-life lessons in money management:

Let Kids Have Options
Traditionally, many kids must earn their own spending money by doing chores around the house. Once a kid has their own spending money, parental interference in how they spend it is common and may prevent kids from understanding how money actually works. Let kids share in the plan for their earning their own money and then allow some freedom for how money is spent.

Offer Advice Not Demands
When kids want to spend their own money, parents should allow them to do so with few restrictions. If kids are in the store and headed for the toy aisle, parents can pay attention to how their children make consumer choices. If they are just throwing everything into the cart, parents can step in and offer advice but ultimately let the child make their choices.

Bring A Calculator
Since younger kids have little concept of money, bring along a calculator (or pen and paper) and let them add up the total of their purchases so they understand how much they have left to spend. As kids begin to realize their money only goes so far, they will likely become more practical about the choices they make.

Parents Must Take a Stand
Once a child understands how much spending power they actually have, it is essentially that parents do not volunteer to pick up the slack. For instance, a child with a $50 birthday gift card buys a $45 video game, they will learn that only $5 remains to make further purchases and mom or dad will not be pitching in. Again, this can help reinforce the importance of staying within a spending limit.

Allow For Those Mistakes
When you see a child making a purchase you know will end badly (e.g. toy doesn’t work like the ads show on television), let them make the mistake. You can state your opinion briefly but ultimately say ‘it’s your money’. When the purchase fails to meet expectations, the child may be angry but it is a good time to relay the basics of how marketing works using points a child can understand. Next time you hit the stores, remind your child about their last shopping experience.

Encourage Savings
Whether your child earns their own allowance or lives off the monetary generosity of grandparents and other relatives, it is important for parents to instill in their children the importance of saving money. Getting children to save away the all important 10% of the money they earn is a good way for them to implement good savings habits into their life as well as have a nice start to saving for the future.

By providing small glimpses of the real world into your children’s life at an early age, they will be more likely to make wise consumer decisions later and understand that money does not just grow on trees. It will also help kids to become financially independent before going on to college and adulthood and reduce the risk of acquiring large financial debts and bad credit once they are finally on their own.

Ed O’Brien is a seasoned writer in personal finance, specializing in credit repair. You can find more of his articles located at

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