Learn effective strategies for teaching children the value of a dollar so you can stop funding impulse buys and trendy brands.
“You can buy anything, but not everything.”
As children get older, they develop really specific tastes. Tweens and early teens are starting to understand the value of money, and they can have very strong preferences for the brands their social network values most. In this way, they’re often pulled in a million directions. Shoes, tech, games, clothes, concerts . . . everything is an option, and every dollar feels like it already has a job.
The challenge for us as parents is helping them zoom out and start making thoughtful choices, not just impulsive ones. That’s why the “You can buy anything, but not everything” mantra is so powerful; it’s all about introducing trade-offs. It’s not about saying no, it’s saying not all at once.
It encourages them to weigh their options, think about what they truly value and start to understand the idea of budgeting, even if it’s just “save up for this, skip that”. At this stage, we’re teaching them that how to choose is more important than what they choose.
Once they turn 14 or 15, they may also be interested in getting their first job. Our eldest, Lila, was lucky enough to get a job at a bakery just a couple of months after she turned 14. It’s been brilliant for her! She works one shift a week after school for three or four hours, and most Saturdays for five hours.
She doesn’t always feel like going to work, especially when she’s in a busy dance season or has assessments at school, but she shows up and gets it done. She’s learning about saving and she’s using a high-interest savings account and has a big goal of saving to buy a car in a couple of years. We’ve agreed to match it dollar for dollar; part of me wants her to be motivated and smash the goal she has for it, and the other part of me wants her to temper her plans because I’m on the hook for the rest.
The laptop contract
As our kids grow older, especially as they start high school, delayed gratification and setting goals starts to become really meaningful. They’re more likely to be influenced by their peers, they’re aware of brands and develop their own tastes, and “fitting in” can become a bigger priority.
Some of these factors were at play when Lila entered Year Seven. The school required that she have a laptop for high school and she really wanted a MacBook—at more than twice the cost of a basic student computer. I offered to pay for a base model ASUS, HP or Lenovo laptop, but she’d only ever used our Apple computers at home or iPads at school. She also had an iPhone.
So, she was pretty adamant she wanted an Apple computer. I was just as adamant that I was not paying for one—and that’s how she entered her first contract to repay a debt.
In a nutshell, I wasn’t keen to fork out $1500 on something that from my perspective was a “want” when I could spend less than half of that on another option that satisfied the “need”.
“I’m willing to pay up to $600 towards a laptop,” I explained to Lila. “The computer you want is $1500. That’s a difference of $900. If you’re willing to pay the difference over the next two years, I’ll buy the computer and you can pay me back.”
She was happy to accept this offer, so we set up a contract. The difference was $900, or $37.50 per month. At first, I looked at getting an interest-free line of credit from the Apple Store to buy it, but they charge $8 a month as an account-keeping fee. I quickly tallied it up and realised it would add $192 to the cost over two years.
It is an option worth looking at if you don’t have the cash available to buy it outright, but I fortunately had enough money in savings to buy the laptop and avoid these extra fees. So here’s how it all played out.
- On the day we took Lila to the shops to choose her laptop, there was a 10 per cent off sale. We got it marked down from $1500 to $1350.
- I bought the laptop on my credit card to earn frequent flyer points, then paid it off with cash the following month.
- Because it was on sale, her payment dropped from $37.50 to $31.25 per month.
- I rounded it down to a nice even $30 payment, and we created a payment plan over 24 months, beginning January 2023.
Over the next two years, she was on the hook to pay us $30 by the end of the month, every month. The main ways she earned cash was through pocket money, selling bracelets that she made and the odd gift of birthday money or “just because” cash from her grandparents.
She never missed a payment. Every now and then she was a few days late, and some months she became pretty stressed when she realised her payment was due and she was short of cash. Suddenly, she would become insanely helpful around the house.
But she persevered and had her first experience of managing debt to buy an asset. She paid it off in full in December 2024 and, let me tell you, that computer is still in pristine condition! By contributing towards the cost of it, her sense of ownership and pride was pumped up, and she has always treated it carefully, like the precious and expensive piece of technology it is.
As for other types of spending? With our kids, we’ve chosen to let them spend their money how they see fit, though it’s hard for me not to step in and offer an unsolicited opinion from time to time. But when I get out of their way and let them explore on their own, we see some really sweet patterns emerge.
For instance, every year my daughter Noa spends her own money buying Easter eggs for her siblings, then decorates them in a beautiful basket with handmade cards and trinkets. She’s super creative and generous and giving gifts is definitely her love language. But she also loves shopping and has learnt to put her own boundaries in place: Like leaving half of her cash at home, otherwise she risks spending it all!
Noa has also taken us up on the laptop contract and she’s kept up with all of her payments too. My son Jesse hoards his cash, as he doesn’t pine for much outside of endless soccer balls and the odd gaming gift card, so we have set him up with a high-interest savings account. He loves earning his “free money” and he’s watched his big sisters pay off their computers over time, so he has a goal of having enough saved up to buy his high school laptop outright.
As for your kids? This is the age where you can think about how you want to guide them with spending. You know your kids and your lifestyle, and what will work best for them and for you. You may want to be a bit more hands-on with guardrails or you might want to let them figure it out for themselves and allow them to feel the pain, frustration, joy and angst of making impulsive spending decisions only to quickly regret them. It’s all part of the journey!
Read next: Financial literacy for kids: 5 things to know
This is an edited extract from How to Raise Rich Kids by Sarah Megginson, published by Pantera Press. Available in stores nationally.
Teaching children the value of a dollar
