Teaching Kids About Money: You Appreciate What You Pay For

My day job is marketing. And, one of the oldest marketing tenets is that people appreciate what they pay for. Even greater — the more you pay for something, the more you appreciate it.

People place a higher value on expensive things because we understand how much our time is worth. $40 may be two hours of work, while $400 is a quarter of your work week.

That $40 table you bought at a garage sale may be in pristine shape, but you’ll chuck it in the back of a pickup. But, if you found an identical table at the store and paid $400, that table would be bubble-wrapped until it was safely in its new home.

Some parents choose to pay for everything for their children — cars, meals with friends, or extravagant birthdays.

Some parents choose to pay for nothing, figuring, “By golly, if I had to pay for things, you will too.”

My wife and I fall somewhere in the middle.

We take great joy in giving things to our children. More often than not, we derive that joy from the knowledge, experiences, stories and wisdom we impart to them. Those are things that last.

We don’t place stock in the latest electronics or toys. We have never had a desire to be part of the 28% in American society who are still paying off Christmas from last year when November rolls around. (Seriously — Americans spend an average of $1,007 on each member of their family for gifts, clothes, food, etc., each Christmas.)

I’ve heard the arguments. “Why are you so cheap? Don’t you want your children to enjoy Christmas?”

Of course. Yet, I have never found the happiness of our children to be dependent upon exorbitant gifts under the tree on Christmas morning.

Think honestly — how many days of pleasure do your family members get from most gifts before they disappear into a drawer, cupboard or pile? Most toys are enjoyed about 2 weeks before a child is distracted by something else newer. (Looking for evidence? Hit up a few garage sales this weekend.)

Beyond Christmas — we don’t plan to fully pay for our children’s cars or college. When each of our children were born, we began putting a small amount, methodically, into savings and 529 college accounts. At the same time, we are transparent with our children, showing them the balances and what it takes to get there.

We explain the limitations of those accounts, and that if they desire something beyond reach of those funds, they will need to work to achieve them. If they want to attend a college that is $40,000 per year, they will need to buckle down for scholarships.

There is value in a child understanding the value of things, of money, and of their time. The best way to do that is by letting them participate and gain a direct understanding of value.

And so, we come back to the purpose of this blog.

Psychology experiments show that the more people pay for something, the more they value it.

People given a placebo pill were twice as likely to have their pain disappear when they were told that the pill was expensive.

People who paid more for tickets were more likely to attend the performance.

When people want the best, they compare prices to tell them which one is better.

They think expensive wine tastes better. They think the expensive headphones sound better. They think a Walmart steak is from Morton’s or Ruth’s Chris. If given two cups of the same coffee, people think the more expensive one is more robust.

It is easy for children to take things for granted when they are freely given. But, it is hard to take things for granted when it is your own blood, sweat and tears.

And so, I encourage you. The next time your child pitches a fit in the aisle at Target, maybe you should consider buying it for them. Or more precisely, asking them if they are willing to give you 1 hour of their time to buy that $20 plush toy.

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