I wrote this and published as a guest post on DadDollarDebt in partnership with my friend EJ about 2 months ago, but am re-publishing it here to ensure all my own readers find it.  Read it here or there, drop a comment here or go read the 15+ comments on his site and join the discussion there!

We’ve struggled to teach our oldest son, Rogue One, the value of money.  We’ve made attempts at allowances, discussed splitting cash gifts from family into personal/charity/savings, and simply put money away he has received into an online savings account.

While he understands money in a factual sense, he has not yet demonstrated a strong grasp of the effort required to earn money, nor the understanding of the time-value of money or the concept of frugality.

Given that he’s 8-years old (at the time of this writing), none of this is particularly surprising.  His parents are educated professionals, and while he grew up as I went through training and my wife through grad school, he’s certainly never been or felt deprived in any way to the point where a lack of money significantly impacted his life.

When he’s made purchases with savings that have turned out to be duds (hello MiP and Chip the useless robots),  he hasn’t really felt the opportunity cost of a bad purchase.

On a recent trip to Wal-Mart I decided to try a new tactic.

A Trip to Wally World for Unmentionables

I’ll admit, I prefer Costco.  Wal-Mart, with all its corporate ugliness and worker maltreatment, has its place in modern shopping.

They’re making strides, but given their history of poor treatment of suppliers and workers (and many of their stores simply were painful because of the lighting and colors), I often avoid it.

Sometimes though you just want to need a bunch of random things all at once (think milk, a mop and legos), and sometimes you just want to avoid spending a ton of money.

It turns out that we don’t pay much attention to Rogue Ones clothing — he’s about to turn 9, and has been wearing size 6 underwear for awhile.

He’s thin, so I don’t think he’s been suffering in silence or damaging his body.  As he’s never said anything to us, we really didn’t think about it.  Until suddenly he mentioned that none of them fit.  So we decided it was time for that most fun trip — underwear shopping.

I’m fairly sure if I had girls this would be a more awkward trip for me.

Amazing, Neon, Sweat-Wicking Boxer-Briefs

We walked into the boys undergarment section and he almost ran to the neon boxer-briefs.  Not only were they an awesome shade of yellow, they were “performance” underwear and would wick away sweat!  They were clearly the ideal purchase.

So we initially discussed utility — what benefit will he get from their sweat-wicking abilities?  Was it something he was missing from his existing pairs?  Was he going to run faster?  Is he secretly Lebron James (who I said could justify them)?

We discussed the value of color — what is the benefit of neon underwear I asked him?  Will you be showing it to other people?  “No, he replied.  Will the color matter if no one gets to see it, if you don’t even see it?  “No,” again.

He began to understand the gimmicky aspects of purchases as we discussed how companies try to convince you to buy things you don’t really need.

Can’t Put a Price on Underwear

The fancy ones were over $6 for 3, so buying him a couple of weeks supply — we aren’t cleaning his underwear every week — would cost over $30.  That may not seem like much when a single pair of these costs $29, but it seems ridiculous for an 8-year old.

So we turned it into a learning opportunity.

If it costs ~$6 for 3, or $4 for 5, we broke down the unit cost so he could see it was $2/pair for the fancy ones, and 80 cents/pair for the generic ones.  Demonstrating the fancy ones cost more than twice as much as the generic ones (which is mostly what he has now).

He’s old enough to do some of that basic math himself, but Wal-Mart helpfully puts not just the total cost of an item, but the unit price for many of them, to help with this.

A child still needs to understand the concept of unit cost — which Rogue One grasps — but it can help with the simple division needed to calculate on its own.  We also practiced this for another exciting purchase — dental floss and mouthwash (encouraging oral hygiene is important and difficult at this age).

So I let him pick out the type of floss/mouthwash he wanted, but made him compare brand and generic names and calculate rough unit prices (looking at ounces of mouthwash and yards of floss).  When he could see via the unit price Listerine cost 4x the price of generic (but identical) mouthwash, despite similar total prices, it seemed like a light bulb went off.

Experience vs. Objects

On the way out we discussed opportunity cost — in kids terms.  We discussed what he would consider more valuable — his toy robots (which he had forgotten about and has even lost pieces), or a trip to the pizza place with video games with his friends.

The toys he can keep for months or years, or he could go to Incredible Pizza a few times with one of his close friends (it has a decent buffet and tons of video games).

If he had to use his own to pick between the robots or the outings with his friends, he would choose his friends.  However since Mom and Dad aren’t going to subsidize all those outings (or toys), he could use his own money for them.

Except he can’t, because he has a couple hundred dollars of useless robots in his closet instead.

I am a big fan of this philosophy — not that I don’t buy objects, but I am frugal and very calculating in my purchases. I’ve been a bit like that since childhood, but far more so as an adult spending my own money,

The Enlightenment

Again, it felt like a light-bulb up went off with these discussions, but only time, and repeated lessons, will tell.  You can go on The InterWebs and find all sorts of discussions on how to teach your child the value of money.

Children learn in so many different ways that there’s no single correct method.  Personalities are different, circumstances are different, and learning styles are different.  So I suggest just throwing things against the wall and seeing what sticks.

It turns out that I had forgotten a lesson — attention to detail.  We accidentally bought him both small and extra-large underwear — neither were the correct size.  So I had to make an extra trip to exchange it for the correct size.  Lesson learned.

What are your thoughts on teaching children the value of money?  Share below!