Teaching children to balance value v cost

By Stew

Frugal parents should be always looking for ways to communicate or illustrate the value of a dollar to their children. And unless you are a still perpetrating the Santa Claus myth on your children, the holidays are just such an opportunity.

Earlier this week, I had a conversation with my children about the upcoming holidays. The conversation unfolded in such a way that they were placed in the position of having to make a judgment that balanced value against cost. The discussion started as Mrs. Stew and I talked about the improvements that we would like to make in our basement. In the course of that discussion, my wife told the kids that we might use some of our Christmas present money for the basement project . . . which went over like lead balloon, of course. She and I had not previously talked about this particular idea and she was not aware that I did not think that our holiday spending plan would force us to choose between paint and presents – although, I have not heard all of her ideas for the basement . . .  Anyway, I quickly jumped in with a little bit better choice for the kids that would still cause them to make a cost/value judgment: I gave them the choice between smaller, personalized gifts for each child v a larger, more expensive gift for them to share.

Specifically, I had seen a couple of Black Friday advertisements for a Nintendo Wii and an Xbox Kinect at reasonable prices earlier that day and so I asked the kids if they would like to each have their own presents like usual or if they would rather that we put all their money together to buy a Wii or a Kinect. Somewhat to my surprise, they all chose to share the game system as their only gift. I had expected a bit more push-back, especially from our middle child who is generally more interested in dolls, figurines, books, etc. than electronics. Essentially, they had to choose between and expensive item that has to be shared versus a less expensive item that would belong to themselves.

There are still some kinks to work out, such as, whether or not I can find a good price for the item. Also, we need to choose whether or not we would rather have a Wii system or the Kinect system. I asked the kids and they seemed to favor the Kinect, but I told them that they need to test out the two systems at our friends’ houses before making a final decision. We also may need to upgrade our television in preparation for such a game system. (Yes, we neither have a Wii or a flat screen TV . . . we are stuck in 2005.)  We do not automatically go out and purchase whatever our kids say that they want, but this is an opportunity to get something that they definitely will use because one of the biggest let-downs in gift-giving is to buy a birthday or Christmas present that the child grows bored with or never plays with the item once January hits.

We also discussed other financial factors that affect these decisions, particularly around the months of November and December:

  • How are our finances in general?
  • Do we anticipate and how likely are possible emergency expenses: car repairs, appliance replacement, etc.
  • How will trips to visit relatives affect our finances?
  • What about holiday entertaining? Parties, hosting, expensive foods, etc.
  • How about holiday gift-giving?

Two additional factors are that a flat screen TV will greatly help in our basement re-design and I am really interested in the exercise programs that are offered by the Kinect. So . . . if all of the other factors allow, mom and dad’s votes certainly lean toward the TV/Kinect combination. However, despite the fact that Mrs. Stew and I will make the final decision and the kids’ vote really does not count for much, we still want them to be exposed to the process.

They need to know that the impact on the household budget of all of these issues needs to be accounted for in an organized manner. More to the point: talk about balancing value and cost in front of your kids! Allow them to be a part of the decision-making process in order to help them begin understand the various financial pressures that affect real life. Then, when a financial decision is made – positive or negative – they will own it and finally, they will be better prepared to make such a decision on their own.

10 Responses (including trackbacks) to “Teaching children to balance value v cost”

  1. Pauline Says:

    I like the idea of including the kids and making them see the cost of things. Kids want so much for Christmas and end up playing with only a few things, which are usually not the most expensive ones.

  2. Jonathan@Friends and Money Says:

    I couldn’t agree more that teaching your children the value of money is essential, but like you say it’s also about involving them in the decision making process and being honest about the situation. I think you have to gauge it based upon how much your children can cope with, but famil financial planning works best for sure :)

  3. Stew Says:

    True, what they can handle needs to be tailored to fit their ages.

  4. Lisa Says:

    Ya know, this conversation (and the lessons in it) is also a good one for adults!

  5. Jeremy R. Says:

    Great way to teach the kids the value of money. You’re lucky that they came to a conclusion so easily. I can imagine my kids battling to make a decision.

  6. Mary Kaplan Says:

    Great idea to talk over purchase decisions with the kids. Our kids are in college now, so we are really seeing the fruits of our teaching moments when they were small. Luckily, they both seem to understand that money doesn’t grow on trees. It is nice to see that they don’t feel totally entitled, which is not unusual these days. Keep looking for those teaching moments as the kids get bigger, and I agree that frank purchase conversations among adults isn’t a bad idea either!

  7. Joshua P Says:

    I used a great method to teach my kids the balance between value and cost. My kids do chores, each chore is rewarded with $1 or $2 depending on difficulty or, as they call it “grossness”. Taking out the trash and putting in a new trash bag would cost me $1, while a huge pile of nasty dirty dishes would cost me $2. Sometimes the kids do a chore together and get $.50 each. Once every week or 2 we head to a dollar store and I purchase deodorant, soap, and other bargain items while my 2 kids walk around the store and find something(s) they would like to buy. When the kids find what they want I ask them “how many chores would this item cost you?” When the response is 3 or more they often re-think their decision and either pick something else, or really put a lot of thought into buying that item. This has been a great blessing because now when my kids ask for expensive things that I simply cannot afford I respond with “Daddy can’t afford it”. They understand more now because they know “dad” only makes a certain amount of money, just like they do, and has to consider every purchase.

  8. Katherine Says:

    Your way of involving your children in money matters is good idea. With credit being pushed so much to college students, it’s really important for these new adults to have good financial groundwork to base decisions on. Hope you all are having fun with your Kinect!

  9. YoungLimey Says:

    Why does this post have a photo of Superman doing the dirty deed with Wonder Woman?

  10. Bhubaneswar Says:

    Your way of involving your children in money matters is good idea. With credit being pushed so much to college students, it’s really important for these new adults to have good financial groundwork to base decisions on. Hope you all are having fun with your Kinect!