By Charlotte Wright
It’s never too early to start teaching kids how to be money savvy. Learning how to handle finances is something that everyone needs to learn at some point in life. Shopping online is a convenient option for purchasing products and services—but did you know that it’s also a good way to educate children on how to be financially smart?
All children want something every once in a while, whether it’s a toy, clothing, or a gadget. Their allowance might not be able to cover the expenses, which makes this a great opportunity for learning the basic task of setting goals. Very Well Family states that as early as preschool, children should be taught that funds aren’t always readily available. One has to practice hard work and patience to be able to achieve what they desire. You can explain the significance of the wish list feature present in most online retailers as a means to set goals. Teach them how to arrange the list in order of priority so they know what they’re saving up for first.
After they’ve identified what they want to buy, teach them how to save, whether from allowance or a handout from a relative. Let them understand the importance of setting aside funds so they will have money for a future purchase. Teach them how to keep it in a virtual or a real bank and ask them to keep track of their money. When signing up for an online store, you can talk about features like rewards and coupon codes that can further save money when shopping.
Children should also be taught not to rely on an allowance forever. When they’re of appropriate age, there are a lot of lessons to gain from letting your child earn their own money. For instance, tech-savvy teenagers can monetize their time online such as selling items like crafts through Etsy and similar platforms. Just make sure that their ventures are legal, safe, and that they’re being responsible.
Instead of asking your children not to spend their savings at all, teach them how to allocate funds properly. The Balance suggests introducing three money jars (these can be virtual) for saving, spending, and sharing. The savings jar are to set aside a nest egg for their goal; the spending jar is for small purchases such as food or a book, and donation money goes into the sharing jar which teaches them how to be generous. Another budget-saving technique is to look for online-exclusive discounts, exploring alternative retail websites and shopping at the right time. Prices tend to be the highest during weekends so it will be smarter to shop during weekdays especially when on a tight budget.
When you use up your funds on a particular product, you lose out on the possible benefits that a different product offers – that is the basic definition of opportunity cost. Bankaroo previously noted that this basic financial concept is lost on many children because of their impulsive nature and they don’t yet realize the value of most things. Expect that your child will make mistakes along the way and help them understand why product A might be better than product B or C. Thankfully, online shopping opens up more options from different sellers that can help in weighing the benefits of a potential purchase. Regular shopping might constrict a child to the choices available in one particular store.
The most recent data from Pew Research Center indicates that 79% of Americans shopped online in 2016 compared to 22% from 18 years ago. It appears that e-commerce is the future of purchasing goods and services, which makes it all the more important that you teach your children how to be smart online shoppers. Maryville University explains that retail websites have a way of analyzing a user’s purchase history so that advertisements are targeted according to the user in a process called data mining. For example, if your child buys a lot of shoes online, the website will suggest different shoe models during the next visit.
Teach them how to control the instinct to purchase the newest products so they don’t overspend. Ask them to constantly go back to one simple question when doing any kind of shopping: “Do I need this?” Check to see that the information being inputted is accurate such as the number of orders and that they aren’t buying into online scams as well.
Online shopping can be used as a great tool to teach children how to manage their finances starting at an early age. But remember that they learn most from their parents, so how you handle your own money will influence how they handle theirs in the future.