It’s back-to-school shopping season. Classes may not yet be back in session, but even before then, back-to-school shopping provides a great opportunity to teach your children valuable lessons about personal finance.
After all, your kids need to be somewhat involved in back-to-school shopping anyway. Too often, that involvement leads to arguments between parents and kids about what to buy and how much they can afford. So rather than wait for trouble to break out in the middle of a store, bring them in on your strategy from the start.
By walking through your thought process with your kids, you’ll demonstrate that you don’t just go out and spend money randomly. They’ll see that you take the time to reason things through. In the process, they may also pick up some tips on how to be an informed consumer.
Here are five lessons you can teach your children through back-to-school shopping:
Lesson 1: Budgeting
The key idea here is that shopping should be more than just the physical act of going to a store (or online) and buying something. It should be a process for making rational financial decisions.
It starts with figuring out how much you can afford to spend. Too often, people start by deciding what they want to buy, and then they end up worrying about how to afford it. Instead, if you start with how much you can afford, this will force you to be more disciplined about deciding what to buy.
So, start with a dollar figure and then you and your child should start making a list of things they might buy. Estimate the cost of each item, and then see how the total compares with your budget. If the total is over budget, you and your child then need to make the tough decisions about how to get the cost down.
Going through this process before you head to the store will allow your child to participate in those tough decisions in the abstract. This is likely to be easier for them to accept than physically seeing something they like in a store only to be told at that point that you can’t afford it. A takeaway here should be to have your child understand the importance of avoiding impulse buying.
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Lesson 2: Planning for future needs
Planning ahead is vital to sound financial planning.
Back-to-school shoppers of all ages tend to buy everything for the school year in advance. This isn’t always the best idea.
For one thing, back-to-school shopping often involves clothing. The problem is, school-age kids often grow very quickly. Your children may be two sizes bigger by next June than they are this September.
As for school supplies, these can run out or get lost. Also, projects may come up throughout the school year that require supplies you didn’t expect to need.
So, plan on making purchases throughout the school year, rather than all at once. Not only will this leave room in your budget for future needs, but it will allow you to better match the purchases with what your kids require as the year goes along.
Lesson 3: Cost of cash vs. credit
To a child’s eyes, swiping a credit card doesn’t look much different from waving a magic wand. You take this piece of plastic out of your wallet, wave it at the check-out counter and everything is paid for.
Of course, parents know the reality that a credit card bill will follow this little magic act. If you don’t pay your balance off promptly, you’ll end up paying interest.
It’s important to teach kids that there is a cost to buying things on credit. It’s fine to use a credit card if you’ve budgeted for how to pay off the balance right away. Otherwise, interest is going to add a lot to the cost of back-to-school shopping.
Explaining this will introduce your kids to the cost of using credit. As their math skills develop, you can have them calculate just how much your credit card’s APR could add to the cost of your back-to-school shopping trip.
➤ SEE MORE:Age-by-age guide to teaching kids about money
Lesson 4: Bargain hunting
Kids like treasure hunts. Looking for bargains can be a real-world version of a treasure hunt.
Once you have your back-to-school list, have your kids do a little research online to find out what different merchants are charging for those items. You can do this alongside your young kids at first, but before long today’s internet-savvy students should be able to handle this task themselves.
Delegating this task to your kids can be an especially valuable time-saver if you’re shopping for multiple kids. In any case, having a child participate directly will allow them to feel a sense of accomplishment in finding lower prices.
Besides bringing down this year’s back-to-school costs, this process can show your kids just how much prices can vary depending on where you look.
Lesson 5: Advertising vs. reality
As you scan the back-to-school ads, you’ll be bombarded by urgent come-ons:
- Up to 30% off!
- Buy one get one free!
- Prices as low as $22.99!
- Our lowest price ever!
If there’s one thing advertisers like to do (besides using exclamation points) it’s to distract you from the true cost of things.
What the above ad lines all have in common is they don’t tell you the actual price of what you’re buying. Merchants have a lot of ways of manipulating prices so it sounds like you’re getting a great deal.
When you do your shopping, ignore everything except the actual price of each item. Compare those prices from one store to another, and you’ll know when you’re getting a good deal.
Kids like to be in on a secret. If you show them examples of how advertising tries to make something sound like a better deal than it actually is, they’ll realize how much this is like a game between advertisers and consumers. The more your children learn the tricks advertisers use, the better chance they’ll have of winning.
You can start with simple versions of these lessons with small children, and then get your kids more involved in the details as time goes on. Eventually, they should learn to do the budget math and research prices themselves.
Besides the personal finance lessons your kids might learn from back-to-school shopping, working through this process with them can provide useful guidance to parents as well. In these times of high prices and elevated interest rates, anyone could benefit from some reminders of how to get the most for their money.
