A major goal in teaching kids to be responsible with money is getting them to control how much they spend. If they can do this, budgeting is much easier, and the risk that they’ll get into debt dramatically decreases. These five techniques can lend a hand as your kids develop this skill.
1) Give them cash or set a card limit.
Many children keep on swiping their plastic without checking account balances. Get your kids to recognize their limits by letting them spend only cash for a while. Cash cannot be replaced if lost or stolen, so it’s best to give them small amounts at a time. Once your kids are showing good responsibility with cash, go ahead and let them have their cards, but work with the bank or credit card company to set up a spending limit on the account. They can practice completing electronic purchases within this new limit before you allow them access to a card with no restrictions. Alternately, you can have them use their cards for only certain types of purchases, such as school supplies, food or items they must buy online.
2) Have weekly spending/budget reviews.
Kids sometimes overspend simply because they don’t have anyone holding them accountable. They need to have you establish a consistent routine in which they evaluate how they’re working financially and set specific spending and saving goals. Remember, you have lots of life experience to share about what purchases to prioritize and why. If your kids are younger, just have them track what they’re doing in a basic ledger or notebook in a simple column format. If they’re a little older and tech savvy enough, spreadsheets or apps can lend a hand.
3) Use parental smart controls on technology.
Most applications or devices have parental settings that require passwords, allow you to use only specific financial accounts or limit options such as play/access time. Find these settings and make them your best friends. Your kids might not like them now so much, but they’ll thank you later when they’re not addicted to screens and are secure enough to pay for things like college, their first used car or a security deposit on an apartment.
4) Limit screen time.
Even if you adjust parental settings on the devices and apps your kids use most, if you let them go online, it’s only a matter of time before they find another website or app that allows purchases and catches their attention in some way. This is as much due to their curiosity as it is companies’ intentional marketing campaigning. For example, even if your kids aren’t “shopping,” per se, they can see dozens of ads on sites like Facebook or through their email. Limit the amount of time your kids are online so their exposure to these ads—and thus the temptation to click through and intentionally or accidentally buy something—is lessened. If they need to make a purchase online, make sure they just get on, do their business and get off. Kids don’t use the computer or other online devices that much? Don’t count yourself in the clear. They still can see tons of ads watching TV, so the limited screen time guide applies here, too.
5) Find something they have to save for.
Ever spent money just because it was there and you could? Kids happily will do it, too, so don’t let their cash just burn holes in their pockets. Find something they need to save for so that when they come up against a spending temptation, they can remember their goal, think critically about whether to put up the cash and resist impulse buying. The goal does not need to be anything expensive. It just needs to be something your child wants badly enough to maintain their focus over a fairly extended period of time.
Kids are very much capable of spending responsibly, so long as you make tracking cash flow easy and provide good motivators. Setting limits is also key. You always can adjust the r