In continuing with the kids & money series, I thought I’d write about the ‘tween’ years – ages 9-11.
Related: Raising Financially-Savvy Children
Tweens (ages 9-11) have some serious buying power – a study showed that our country has 2.5 million tweens with $1.7 billion of discretionary income. What’s even more telling is that they influence up to $20 billion of family purchases. With that much spending, it’s important they have some basic money lessons to make smart buying decisions.
For kids ages 9-11, the focus starts to shift towards bigger purchases beyond the occasional toy or treat at the store.
Keeping Up With the Joneses
Researchers believe the ages of 9-11 is when kids start focusing on their peers – what they own, what they wear and even what neighborhood they live in. It’s not uncommon for kids these age to want what their friends have – the latest iPod, designer jeans, tickets to the biggest concerts in town and fancy shoes. And who will they want to pay for all of this? You – of course.
How you handle these situations will shape how they perceive money, and can affect how they look at purchasing big ticket items. Researchers say the best way to handle this situation is to give them a sense of responsibility and show them that money doesn’t ‘grow on trees’.
Good Spending & Bad Spending
One way to develop money-responsible kids is to show them the difference between good spending and bad spending.
Bad spending is when you buy something without doing any research or thought into the item. No thought it given to whether you can actually afford it or not. It’s impulsive and even addictive for some. Kids make these kinds of purchases all the time – it’s your job to explain the difference to them.
Good spending is when you buy something you have researched and are sure you can afford. It may not even be something you need, it can be something fun and don’t even need as long as you have looked into the item beforehand and can afford it.
Here are a few things to explain that your child should consider before a purchase:
– Is the price fair? It’s important to put it into terms they will understand. How many hours of
babysitting does it represent – and when it’s put that way, is it still worth it?
- Price comparisons – different stores have different prices, and it’s important to consider your options on finding the best price possible. Ask them how they could look elsewhere and whether they could find a lower price.
- Impulse buying –have you thought about how you would use the item and how it fits into your life, or is it an impulse buy?
- Affordability – is there enough money in the bank to pay for it? If not – you shouldn’t buy it.
- Trends – are you buying the item to try to fit into a certain peer group (social acceptance), or do you genuinely like the item for itself rather than what it represents?
Opening a Bank Account
Another money lesson to teach your child is to open a bank account. Rather than storing money in a piggy bank like they have been doing in the past, it’s now time to introduce them to a real bank account where they can store their hard-earned money from side jobs they may have.
A good start is to explain the basics of what a bank does: keeping money safe and lending money (so they can buy houses).
When opening a bank account, you’ll want to consider the following:
- Type of account – most kids start with a savings account
- Bank fees – you’ll want to sign up for a bank plan that has minimal fees
- Promotions – this is a good example of looking for the best deal. Perhaps there are small bonuses they can take advantage of for opening an account
- Online access – this should be given to kids so they can monitor their account while at home. It’s important to explain to them what can be done with online banking and to monitor their activity from time to time.
Conclusion: the tween years are all about keeping up with the Joneses. Kids want the latest designer clothes and electronics, so it’s important to explain to them what good vs. bad spending is. Opening a bank account makes it ‘real’ for them and is a good way to get them involved in managing their money.