It's never too early to start teaching kids about personal finance. Spending and saving habits -- much like eating and exercising habits -- are developed early in life, and hard to break. An Experian College Graduate Survey found that 40 percent of college grads rated their current financial security as either "poor" or "fair." These students reported they were living on student loans and credit cards, relying on parents for financial support, felt pressure to live beyond their means, and weren't putting enough money in savings.
The sooner kids can develop a healthy, informed relationship with money, the better prepared they will be to make wise financial decisions. Here are 12 ways parents can use back-to-school shopping as a practical way to teach kids the value of a dollar, how to successfully manage their financial resources, and how to get organized for the coming school year.
The first lesson: teaching kids to think about what they truly need. While parents may be accustomed to conducting a yearly assessment themselves before school starts, it's important to bring the kids in on these decisions. Together, decide which clothes, shoes, supplies, etc., can be reused for the next school year. The goal is to teach kids not to make unnecessary purchases just for the sake of "having something new." While fashion magazines may declare what's "in" every year, in real life, clothes and shoes are "in" as long as they fit and look nice. Buying secondhand items is also an option.
Once the family has agreed which items can be recycled, it's time to create a shopping list of what else is needed. Leslie H. Tayne, a personal finance attorney, author of "Life & Debt" and mother of three teenagers, says discipline is important. "Do your best to stick to your list, because your child will learn by your example." Further, Tayne says staying focused helps families avoid impulse buying. "If you continue to do this with all of your shopping, then your child is more likely to adopt this approach when shopping as he/she gets older," she says.
American families plan to spend an average of $501 this year on back-to-school expenses for kindergarten through high school kids compared to $488 last year, according to an annual survey by Deloitte. When consumers don't stick to their budgets, they usually end up spending money they don't have, which typically leads to debt, or putting off other financial obligations. When creating the back-to-school budget, parents should explain that there are other bills -- mortgage, car payment, utilities, food, etc. -- that also have to be paid, and it's important not to go over the amount designated for back-to-school shopping.
Back-to-school shoppers are more likely to make online purchases via desktops or laptops, but mobile is not far behind, according to the Deloitte survey. Kids are tech-savvy, so parents can allow them to "window shop" online to compare prices and find the best deals. In this exercise, they learn that saving money and finding the best deals requires research and time -- but is well worth the effort. Bonus: They also learn that smartphones aren't just for taking selfies and playing Pokémon Go.
Tayne recommends searching through circulars to find coupons that can be used to save on back-to-school supplies. Just a few snips of the scissors can provide substantial savings at the checkout counter. "Empower your child to become coupon savvy by getting them involved with becoming a coupon clipper and adding to your coupon envelope," Tayne says. Valuable coupons can also be found online.
Apps such as ShopSavvy, RedLaser, and Pic2shop allow consumers to compare product prices. This is another way to teach kids the importance of conducting research to get the best price. Pittsburgh's Action News 4 interviewed a consumer looking for a DVD player who found selections ranging in price from $22 to $50, depending on the store. Back-to-school shoppers can likely find similar savings simply by scanning bar codes -- a fun job for kids.
When paying for purchases, parents should explain the rationale for using cash or a card. Tayne recommends setting an example by using debit cards, to avoid fees and accrued interest, and explaining to your child that credit cards require timely monthly payments to avoid late fees and other penalties. With a debit card, you can't spend money you don't have.
Some consumers may choose to use a credit card so they can earn rewards. "Explain your reasoning to your child, so they see that you have responsibly considered your payment options and have a logical reason behind the payment method you have chosen," Tayne says. It's also important to explain that these points are beneficial only if usage of the card doesn't entail high interest rates, etc.
Receipts provide a great opportunity for explaining the purchase process. Parents can use them to explain how much school supplies cost, how much was saved, and how taxes increase the total purchase price. For major purchases, such as clothes and shoes, it's also important to explain the store's return policy so kids can understand, for example, that they may not be able to return anything if they misplace the receipt, or if they keep the items past the return deadline.
Kids may be accustomed to seeing their parents buy bulk toilet paper and paper towels, but it may be beneficial to also purchase notebooks, printer paper, and other school supplies in bulk. In doing so, parents can show the price difference between single unit vs. bulk items, and also explain that bulk purchases reduce the cost of repeatedly driving to the store to replenish supplies.
Shopping at dollar stores is one way to save a lot of money on notebooks, folders, packs of pens and pencils, erasers, organizers, calculators, and other traditional back-to-school items. Dollar stores are also good places to purchase other items for kids, such as hand sanitizer, plastic storage containers, toys, earbuds, and candy, as well as dorm room essentials for college students. At the same time, parents can teach their kids that, while it may be more convenient to purchase these items at big-box stores, they can enjoy substantial savings by being savvy shoppers.
Parents with college kids spend a good chunk of money on textbooks. According to a study by the Student Public Interest Research Group, in the past decade or so, the cost of college textbooks has increased by a staggering 78 percent. However, price comparison sites such as BooksPrice and Bigwords help students find the lowest prices on books, and some textbook websites also offer money-saving options such as renting or downloading textbooks. For example, PIRG reports that the print edition of a particular calculus book is $225, while the digital version is $118. This is yet another way for parents to show kids the importance of comparison shopping during the back-to-school preparation process.