It’s fairly safe to assume that, at any given point, people are smacking their money down on a name brand item with which they’re familiar. Kids aren’t much different about this, but part of a good financial education is learning whether the label attached to something truly matters.
What’s In a Name
Shakespeare, one of the most famous playwrights in history, once penned that a rose by any other name would smell as sweet. The general sentiment was that people are who they are no matter where they come from, that attaching labels doesn’t change something’s finite nature or value. This idea is easy to apply to finance in theory, but in actual practice, it’s much harder.
For an adult, a name brand can represent a host of things, but most often, it represents trust and good feelings. If an adult has a good experience with a brand, his brain stores information not only about the consistency and quality of the brand’s features, but also about the pleasure taken from the product. Simply put, people expect that if a brand has performed well or made them feel good before, it will again. The result is that people often pay extra for something even when a similar product is available for less money.
Now, kids expect a brand to perform well again and give repeat pleasure, too. In that, they’re no different from parents or caregivers. Kids are a little different, though, in that they are still looking for positive feedback and approval from friends to a much larger degree, trying to identify whether they’re “cool” or “normal” (whatever that is). They also haven’t developed the ability to rationalize to the extent or level adults do, with much of their reactions and thoughts being emotionally driven. To a kid, buying a certain brand isn’t just about getting something of quality. It’s about fitting in, about going with the flow and meeting social expectation. As a parent or caregiver, then, you have to recognize that, when a kid asks for a specific item from a specific company, it might not have more to do with what’s happening at his school locker than what the CEO of Company A told his marketing coordinator to do.
Bridging the Gap
Clearly, name brands play a role in what kids do, think and feel socially. From that standpoint, yes, they matter. They matter a lot. That said, you have to bridge the gap between healthy social interaction and practical finance. If Everybody’s Brother suddenly got Some Cool Phone that cost a ridiculous sum, for instance, it might not be in your child’s financial best interests to let your kid buy Some Cool Phone, too, even though buying the phone might help your child fit in. In these instances, the smart thing to do is teach your child this first golden idea: Function rules.
Function rules means that, before your child buys something, he absolutely must comparison shop—that is, he has to practice some degree of frugalness. (Remember, frugal means to be financially efficient, not necessarily to be cheap or to purchase low quality.) If your child can obtain more cheaply a product that has all the bells and whistles as the primary brand to which everyone else is flocking, then function rules would dictate that he buy the less expensive brand. It is what kids do with a name brand item that really is important, so as long as your child can participate in what his peers do, it doesn’t matter what company provides his product.
Of course, sometimes companies that can offer the same functionality don’t offer the same durability, so the second idea to follow is: check the timeframe. Always have your child do his homework on how long the items he wants to buy last from various companies and have him buy a long-lasting option. You might need to do some math to prove to him this will save him money and thereby let him have more fun in the long run, but later on, he can apply the lesson to advanced financial concepts such as insurance, stock and even home repair.