Kids in the Marketplace Series: Kids’ Decision Making with Dollars

Revision Date: 9/8/2004
Maria Pippidis

What does your 10 year old, who averages more than five trips to a store weekly, need to know to be a smart consumer? Does your teenager turn a deaf ear to your advice on what to do with her babysitting money? Are you tired of your two year old screaming in the candy aisle until you’re to embarrassed to do anything but give in? You are not alone. Money and kids are stressful and difficult. It doesn’t have to be that way. There are ways to help your kids grow up and become careful and thoughtful consumers. With help and patience from you, kids can understand the limits of their money resource and how to use it in the marketplace. The stress may not disappear, but can be managed so that you and your kids can enjoy each other while learning skills in the marketplace.

How we spend our money is a personal, sensitive and controversial subject. We often leave our kids’ patterns of spending and saving to chance. Kids don’t become adults with ready made consumer behaviors. They learn the value of money, what money buys, how to shop and what to choose by their own and others’ experiences. They learn from you and me. We strap the baby into the car seat on the shopping cart and off we go. Kids love the action and the view the grocery store, the post office, the bank, the ice cream store, and the mall. They are building a storehouse of information as they watch adults and older kids shop and choose.

Earn, save, spend, shop, and choose. We all form habits or regular practices to make it easier to manage our money and make purchasing decisions. Some habits are good, others are not so good, and some are downright terrible. Our environment encourages us to live in an earn-spend cycle. Advertisers create fantasy pictures to delight and tempt us to consume products and services. We are pushed to earn big dollars so we can buy more things. Things that may or may not give satisfaction or meaning to the lives we live. As adults we set the model for our kids. Our hope is that they learn to make money choices that give satisfaction and are within their resources. Before we can teach our kids effective money skills, we need to know clearly what we want them to learn. What you want them to learn is closely tied to who you are, what you value, and how you spend money. A Reader's Poll conducted by Money Magazine in 1993, shared what some parents wanted their kids to learn. The box below gives the results. Think about the results, how would you rank these five values? Would you add others?

The money management and marketplace skills you set as goals for your kids will be affected by your own money values and personality. Some quick check marks in the Money Personality box may help you recognize how you use money. What parts of your money personality do you want to pass on to your kids? Which characteristics and practices do you want to help them avoid?

When you discuss with your kids the money personality box, think about the characteristics you would like them to develop. Do you want them to be generous gift givers? Do you want them to know how to balance the price and quality of an too item to get real value? Is money critical to a good, successful future? Is money in the bank important? Is money to buy a good time,
to buy security, or to achieve certain goals? What is important to you? Write down those things you want them to learn and why.

Two parents may have different values, spending patterns, and personalities. It’s very hard to teach kids when you send mixed messages. Know yourselves, your strengths, and shortcomings first. If you have trouble talking about money with your parenting partner, start with the money personality quiz. Then talk about your money personalities, values, and marketplace skills. Especially talk about those areas in which you disagree, then try to find a common set of values and skills that you think would be best for your kids. Close parental communication is critical if your child is to learn positive ways to earn and spend money. You both must give the same message to reinforce the skills and knowledge you value. Your consistent efforts as a team will help your kids learn balanced and useful money management patterns.

After you have set your goals for the values and skills you want your kids to develop, share them with your kids. You might start the conversation with, “What do you think money is good for and why?” This will give you a benchmark on what your child is thinking. Try to avoid judgement discussion and really concentrate on listening. This discussion will help you identify what values have begun to take root and which you need to find new strategies for reinforcing. When your child talks about the why… “because I saw it in TV, because Jeremy has one, because it looks pretty, because I need one,” try to hear the unspoken message. It may be a need to fit into a group, they may be struggling with envy, or it may be a unique way of solving a problem of their own. Kids have very specific and, to them, compelling needs. They have little sense of time or postponement of satisfaction. They live in the now. Part of growing up and learning consumer skills will be learning deferment of needs, balancing available resources like money and time, and accepting trade offs.

When Should I Start Teaching About Money and the Marketplace?

How old should my kids be before I begin to teach them the value of money and what it can be used for? The first trip into a store with your child is the beginning of their money and marketplace experiences. The bright colors, lights, and sounds create impressions that are reinforced with each visit. Kids are being taught from the time you communicate with them, through your smiles and frowns, your movements, actions, and words. According to a survey of 2000 readers of Money Magazine, 66% of adults would teach the importance of saving to kids ages seven and under and 65% wanted to encourage children to make charitable contributions out of their allowances and savings. Fifty-two percent say they would start kids receiving an allowance between five and seven. What bills should kids over the age of sixteen take major responsibility for paying? Seventy-three percent said social expenses and gas for the family auto. When and what kids are able to understand is based on their own previous experiences and physical, psychological, spiritual, and emotional development. Some kids will be ready for an allowance at five, others not until eight. One four year old may be able to save regularly, another seven year old may still not understand about savings. Each child in your family will be ready to learn different skills at different times. If you understand some of the development and consumption stages they are going through, it will be easier for you to decide what to teach.

Stages of Consuming

A look at kids’ developmental stages and their consuming patterns will help answer the question what should I teach my kids and when. Find where your child is in the consuming stage and you will have a better idea of what he or she needs to know. Age groupings are not definitive, but rather broad categories.

McNeal characterizes kids’ consuming behavior into a set of patterns which parallel kids ages and developmental patterns. The chart on the next page illustrates his generalizations.

As you can see from the stages of consumer patterns, many consumer concepts cannot be taught until the time is right. Your child must be at a physical, mental, and social point in order to grasp and process. Observations and experiences with money and the marketplace do not always make sense to a child immediately. Then in a magic moment, one more piece of information is gathered and the whole process is suddenly organized in the child’s mind. These experiences and observations create the foundation to evaluate new information and build new concepts.

The next four TOPICS detail information about the relationships between age, development processes and kids earning and spending patterns. They will give you ideas about specific marketplace experiences, skills, and concepts kids need.

1. James U. McNeal, Kids as Customers, Maxwell Macmillan International, New York, 1992, p. 46.
2. “A Readers’ Poll,” Money Magazine, October, 1993, p.31.
3. Janet Bodnar, Money Smart Kids (and Parents Too!), Kiplinger Books, Washington, D.C., 1993, p17.
4. “A Readers’ Poll,” Money Magazine, October, 1993, p. 31.
5. James U. McNeal, Kids as Customers, Maxwell Macmillan International, New York, 1992.
6. James U. McNeal, United States Kids (4-12 years) Receiving and Spending Money- Bar Graph, p.40.

Additional Resources
Bonnie Drew, 101 Activities to teach Your Child About Money, Career Press, 180 Fifth Avenue, P.O. Box 34, Hawthorne, New Jersey 07507, 1992.
Janet Bodnar, Money Smart Kids, Kiplinger’s Books, Washington, D.C., 1993.

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