Should Kids Learn to Spend or Save First?

By Jonathan Bach, author and illustrator of Clarence Gets a Bargain

Why does spending come first?

Because it’s the part they can see. Saving is invisible to a kid. It’s a number in an app, or a 529 statement nobody opens at the dinner table. Checkout is loud. There’s a price, a card or cash, a beep, and a receipt. Kids learn from what they watch, and what they watch is you paying for stuff.

The research lines up. A 2013 University of Cambridge review for the UK Money Advice Service found that by about age seven, most kids already understand that money is swapped for things, that people earn it, and that you can plan ahead and hold off on a decision. The same review found that teaching young kids money facts directly does little to change what they do. They pick up money behavior by watching adults.

So you’re teaching spending either way. The only question is whether you’re doing it on purpose.

Isn’t saving the more important habit?

Saving is a spending decision. Every dollar saved is a purchase somebody decided against, or put off. A kid who can’t size up a purchase has no way to tell which ones to skip. Teach the judgment first. The piggy bank has something to work with after that.

Most picture books about money start with the piggy bank. Fine. That’s a lesson about something a first grader can’t watch happen.

Doesn’t teaching spending make kids materialistic?

Spending badly does that. Spending well is a set of brakes:

• Check the price before you go.
• Compare two versions of the same thing.
• Ask the question out loud: is this a want or a need?
• Read the receipt. The sticker price is never quite the price you pay.

Every one of those slows a purchase down. A kid who does all four buys less junk than a kid who was just told “no.”

What does spending well look like for a 6-year-old?

• Reading a sale ad at the kitchen counter before the trip.
• Comparing the thing they want with the one next to it on the shelf.
• Knowing that marked down doesn’t mean broken. Stores cut prices to clear shelf space for a newer model.
• Handing the coupon to the cashier themselves.
• Finding the sales tax line on the receipt.
• Asking want or need? before anything goes in the cart.

When should kids start learning to save?

On the same trip. When a kid compares two prices and picks the cheaper one, the difference is savings they can see, in dollars and cents, in their hand. Start there. Then move it into a jar, and later into an account.

That’s the order in the book. Clarence earns his robot. His mom assigns shopping homework. He compares models, finds the better deal, and remembers the coupon in his pocket. His dad is more impressed with what he saved than with the robot. The saving shows up because the spending was done right.