Spending money. Let’s face it. We love to spend money, but we don’t love to talk about our spending decisions. Have you ever been in a store when a child asks, “Can we buy that toy?” and then hear a long, detailed response on all the reasons to buy or not buy the toy? Probably not. Instead, we hear a quick response like “maybe” or “nope.”
That conversation is actually a great opportunity to educate children about money. Ask them the questions: What do you need to do to get that toy? Would you rather spend money on a toy instead of eating dinner that week? What else could you buy with your money? Make them aware of the decisions they face when spending money. They will come to appreciate what they have and not spring for every shiny new thing just because they have money.
What might help is to talk through these 5 Steps to Smarter Spending. If shopping on your own, go through the steps as a thinking exercise.
- Set a limit. How did you come up with that number? Spending money is fine, but only if it’s within your means.
- Trace your money. What did you have to do to earn that money? Understand the value of what you are spending.
- Weigh your options. Where else can you spend that money? Don’t forget to factor in basics like food or shelter.
- Compare prices. Read my post “What Is The Right Price?” to learn more.
- Let go. Every financial coach seems to say, “Don’t spend money!” But I’m here to tell you that spending money is ok. Let me repeat. SPENDING MONEY IS OK! We make money so we can use it. Just be smart about it!
Homework: Practice the 5 steps to smarter spending using a food menu. Bon appetit!
Tune in next week as we tackle budgeting. What is a budget? How do I begin? Or subscribe below to automatically receive weekly lessons in your inbox!
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