Back to School Money Talk for Middle and High School Students

Back to School Money Talk for Middle and High School

If you are sending a child back to school this fall, especially middle school and high school, then you are in the perfect position to provide some money lessons. Your child will want and need certain items for school, and you will be working within a limited budget. This is the perfect combination to start a solid financial foundation for and with your kids.

You are in a position to teach them three fundamental components of personal finance:

  1. Set Goals
  2. Establish a Budget
  3. Apply Basic Economics

Not only will you set your children up for financial success in later years, but you will also make your own life easier in the long-run. But be careful, because they will try to get you to break the budget and you will need to stand your ground!

Set Goals for Back to School Shopping

Goal setting is one of the first things we must learn about money and one of the first steps to becoming financially successful. But very few people ever begin with this step, much less implement it at all. That is why so many people have messy finances. Now you can teach your kids all about it!

We are going to focus only on short-term goals here. It is about what your child wants and needs for school. First list the needs. While every school is different, there may be some common themes:

  1. pens
  2. pencils
  3. notebooks
  4. backpack
  5. lock for locker
  6. etc.

Now, it’s time to discuss their wants:

  1. New jeans (2 pair)
  2. New shirts (4 short sleeve, 4 long sleeve)
  3. New shoes (so many categories here!)
  4. New electronic device (what’s popular this year?)
  5. etc.

Of course, you are going to get into the difference between a new jacket and a new North Face jacket. Don’t worry about that just yet. These are goals. The point is to follow the system.

Establish a Budget for Back to School Shopping

Now it is time to discuss the budget. You need to decide on how much you are willing to spend on back to school this year. For example let’s say you will spend $500. Now some parents may think $500 is excessive, others may think, “for which category above? Shoes?” Obviously your budget is based on your income, your willingness to spend, your parental philosophy, etc. But let’s just go with my example for now.

Are you willing to let them spend $400 on shoes and then get their jeans and shirts dirt cheap at a discount store? If so, then your budgeting is done!  At least step one. (If not, keep reading…)

The next step is to look at all the items on the list and estimate a price-range. You can do this on Amazon, by visiting the local stores, or using any other online retailer. See if you are even close. If so, now you are done. If not, move on to basic economics.

Assume that you don’t want your money “wasted” on a $400 pair of shoes. In that case, you will start with estimating prices (see previous paragraph). Now set a budget limit per category.

Your child may not be happy with this budget amount. But this is where you move into the Basic Economic lesson. Before we move on, you have to decide if they can dd their own money, or if you want any other incentive such as you will match their own contributions with an extra 50 cents on the dollar, etc. Also, if they come in under budget can they keep the difference?

Finally, how long do these purchases have to last? If this their annual budget or will they be allotted an additional amount for spring shopping? Expectations and agreements should be clear and in writing somewhere (text message, email, or a note on the side of the refrigerator).

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Apply Basic Economics

Remember the North Face jacket they wanted? Now that they have a budget, it may no longer be possible to get that brand along with their other name brand items. Or, they may be more willing to do their back to school shopping at a discount retailer, such as Marshall’s where they may have to sift through more clothes, but could end up with a better bargain. or maybe the jacket is just that important to them so they will sacrifice on the name brands of their shirts instead.

So basic economics is about supply and demand (not covered here) and scarcity of resources (aha!). There is only a certain amount of money to go around. Just like in your real life you can’t get the pool, the new car, the vacation to Caribbean, the back deck, the front porch, and the new kitchen all at the same time. You have to prioritize and decide what matters most. Maybe a smaller pool and less expensive tile for the kitchen. or maybe wait another year for the pool, etc.

As your child begins to see the limited amount of resources (money) for their back to school shopping, they can circle back around to the original shopping goals. Maybe they need to make some modifications. This will allow them to better allocate their funds throughout their budget categories, which in turn will take pressure off their scarce resources. As you can see these three steps are part of a cycle.

Set goals –> set budget –> apply economic principles –> adjust goals –> adjust budget –> match to economic principles. You can keep cycling through these goals until the budget works with more realistic goals.

Final Thoughts

Most students today have very little personal finance knowledge. Many parents don’t feel confident enough in their own situation to discuss money and/or they feel it is not a proper thing to discuss. But students who are taught basic money principles from their parents will be the ones able to make it on their own. The others? You will read about them in the NY Times – as some sad story of a 20 something unable to make it while living at home because they borrowed $100,000 for college, $20,000 on credit cards, and their degree in Student Studies (surprise) didn’t lead to a job!

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The three authors, Bill Pratt, Mark C. Weitzel, and Len Rhodes, are industry leaders in personal financial education. Together, they have a combined 75 years of experience in banking, economics, and entrepreneurship. Now, they teach thousands of students personal finance concepts and decision making skills, author textbooks and public press books on personal finance, and help schools develop innovative personal finance literacy programs. Recently, they were instrumental in developing a personal financial management certification program for leaders in higher education. The other books in The Money Professor series include The Graduate’s Guide to Life and Money and Extra Credit: The 7 Things Every College Student Needs to Know about Credit, Debt & Ca$h. Their books, lectures, and programs give students, parents, and educators the tools and knowledge to make good financial decisions all their lives.

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