Saving up to buy “something” is embedded with a lot of financial lessons. This exercise will be focused on:
- Purchasing items that bring joy and value to their life
- Understanding the concept of trade-offs
- Researching and comparison shopping; and
- Developing a long-term savings plan which includes the concept of earning
The goal is to teach thoughtfulness and intentionality behind every purchase and to instill good habits in our children to make smart financial choices.
- Have your child make a list of needs and wants.
- Help them to prioritize their list and choose the item(s) they want to save for by discussing the qualitative “value” of the item. Highlight that some things that add joy or value to our lives do not cost money and alternatively, some things that do cost money do not always bring joy or value.
- What is the value or joy that the item will bring them?
- How will this item enhance their lives?
- As they narrow down their top choice(s), discuss the concept of tradeoffs.
- Saving for this item may mean foregoing other things.
- If along the way, they choose to use the money for something else, it might mean taking longer to save or working more.
- Have them research the prices and teach them the importance of comparison shopping.
- Create a timeline and discuss ways to earn.
- Over the course of saving, check in and determine if this item still has a perceived value to your child.
- Do they still prioritize this item over other things?
- Do they still feel that this item will bring them joy?
- As they get closer to their savings goal, discuss if there were any adjustments they had to make along the way and if this is the highest and best use of funds.
- When goal is met and the item is purchased, explore:
- How does it feel?
- Does it provide the joy and value they hoped?
- Do they feel more accomplished because they earned it?
- If you notice that the joy has worn off, it is a great time to talk about the lessons learned.
- What different decision would they have made?
- What will they do different next time?
- How will they make better buying decisions in the future?
- Go back to the original list and start the process over.