School your kids on spending

Most schools won't be back in session for another four weeks, but for some kids, the lessons can start now if parents use back-to-school shopping as a way to teach important money skills.

With the recession still upon us, shopping for the ever-lengthening list of school supplies -- not to mention clothes and accessories -- is sure to put a pinch in many family budgets. But strapped parents who don't explain the situation to the kids can wind up scaring their youngsters by creating worries about the state of the family's finances.

Instead, parents can use the opportunity to teach about budgeting and shopping for value, as well as making their youngsters feel like they're pitching in to bolster the family budget.

"You don't want to say 'We're broke,' " says Jenny Martin, a South Carolina mother of three who blogs at SouthernSavers.com. "You want to say that mom and dad want you to spend your money wisely. You want to make it not a sad moment but a learning moment."

The first idea to introduce is the notion of spending within your means, Martin says, and that means starting with a budget. "Explain to them that even adults, who have the money, still have to make choices and can't walk in and grab everything we want in the store," she says.

That's important, since youngsters often don't understand money is a finite resource that needs to be managed, not just spent, notes Detroit native Deborah Owens, a financial literacy coach and author of "A Purse of Your Own: An Easy Guide to Financial Security."

"All our kids do is see us go to the bank and see money come out of the wall," says Owens. "They don't connect the dots in terms of our family budget."

For younger kids, sticking to the budget may be as simple as adding up purchases on their shopping lists. For older students, Nina Sutton, author of "The Chic Mom's Guide to Feeling Fabulous," suggests using gift cards to give a feeling of control and responsibility.

"With the gift card, they need to choose how they're going to spend it, but when it's done, it's done," Sutton says. "There's no reloading it unless they're using their own money."

Having your student put some of his or her own money into the back-to-school budget is a good idea, especially for discretionary items such as clothes or electronic gadgets, Sutton suggests. Parents can set up some quick and easy chores, such as cleaning his or her room each night, so that a kid can earn a portion of the money already being budgeted before going shopping.

"If they're doing something to earn that money, they feel some responsibility for the purchases," Sutton says.

Once the budget is set, parents can start to import some lessons about smart shopping, looking for value and separating needs from wants.

With a few weeks still to shop, Martin suggests comparing ads and deals from office supply stores as well as big discounters. "There are so many back-to-school deals, and you can tell your kids, we're going to spend some time looking at these," she says. "You could get your glue, pencils and all the other consumable items for maybe $10 and be done." On top of that, she notes, two big office stores were giving away backpacks with a $10 purchase.

While kids might be satisfied with generic notebooks or crayons, use other purchases to talk about discretionary spending, says Owens.

"Go out with your children and allow them to make the choice," she says. "Ask if they want that brand-new Spider-Man lunch box for $12 or would they rather spend $5 and have money left over?"

Another option is to offer students a choice of stretching their dollars to buy the things they really want by re-using items from last year. Take an inventory of leftover school supplies from last year and see whether they're willing to re-use a binder or backpack so they'll have money for the sneakers they really want -- or even offer a cut of the money left in the school budget.

With fashion-conscious kids, parents might want to have them hold back some of the budget for clothing and just buy one or two outfits at the start of school, Sutton suggests. That way, if their classmates are sporting some hot new look that they missed, they can go back to fill in their closet later instead of filling now with clothes they won't wear.

Beyond money management and shopping skills, parents can use back-to-school time for some applied math, whether it's subtraction and addition for first-graders, or calculating and comparing the per-unit cost of a $3 bag of 10 pens vs. a $4.25 package that holds 24.

Whatever approach parents take, have the money discussion with your child in advance, warns Lou Manza, professor of psychology at Lebanon Valley College in Pennsylvania.

"If something's been going on for months and months, sit the kid down beforehand and explain it to them," Manza says. "Don't just spring it on them in the car on the way to the store."

Tailor your financial discussion to the age, maturity and temperament of your child, and focus on giving them choices and helping them feel that they have some control over the situation.

"You can make them understand that everyone needs to save, we're a family and everybody helps out," Manza says. "You can tell them, 'Mom is cutting back like this and dad like this,' so it's not just the kid who's paying the price."

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