8 Ways to Curb Your Kids’ Spending Habits


Children today are consumers, allowance-fueled spenders whose choices are compounded by pressure from virtually everywhere about the hottest brands, coolest new technologies and latest fashions, music and entertainment.

Many have grown up in a “want it, buy it” household. Now that purse strings are tightening, children of all ages need to understand how money works in order to stay on track with budgeting and spending.

"The biggest mistake parents make is not talking to kids about basic money management, including what it is to be in a down economy,” says Lois Smith, consumer and family economics educator at the University of Illinois. “They aren’t learning money lessons at school so it’s up to the family to create activities or opportunities for understanding finances."

Here are eight easy money strategies for reigning in your little spenders:

1. Set rules-based allowances. The trick is to agree on expectations, says Smith. Is the money a gift or is it payment for a certain amount of household responsibilities each week? Do you want your kids to save a portion of it? Are they expected to take care of incidental purchases, like new music or school supplies? Agreeing on the rules out of the gate will prevent frustration and disagreements later.

2. Let them pay themselves first. A savings account is a fast, easy way to teach kids the basics of money management. “Make an agreement that they put 10% of money from gifts or an allowance into savings with interest first,” Smith advises. “Then each week show them how their contributions are working for them.”

3. Make them shop around. If your child wants to buy something, teach them to compare prices, advises Smith. Perhaps before they spend, they have to find the best deal or look for similar items or brands at a lower price.

4. Give them a real-world exercise. In Smith’s kid workshops, she has them pretend they’re 25 and single. They pick a career, then she gives them salaries, plus a handful of stations where they can buy things like rent, insurance, a car, public transportation, so they learn how far money needs to stretch. “Kids are less likely to beg for non-essentials when they truly understand how money works,” she says.

6. Play "Let’s Make a Deal." You’ll teach kids not just about money, but about team effort and responsibility if you bargain with them, says Smith. Perhaps you’ll match what they save from their allowance each week, up to 10%. Or if they’re eyeing a purchase, consider splitting it, or help them create a plan and reward them when they reach their goal.

7. Hold weekly meetings. Keeping everyone in the loop on the budget ensures the family stays invested in goals and stays on track. Kids are more likely to understand why certain purchases need to be tabled if they’re kept apprised of the basic budget status.

8. Share in the budgeting.
Give your kids a role in family financial planning, advises Smith. Can they cut coupons? Help you plan groceries? Can they pitch in to babysit their siblings so you don’t have to hire someone?


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