Would You Teach Your Child a Financial Lesson, Even If It Meant Paying More?

by Travis Pizel · 22 comments

Reading through the email, I had a difficult decision to make. Not showing it to my son would save him some disappointment, but making him aware of it could be an invaluable financial lesson.

My son is saving his money to buy a new monitor for his gaming computer, but is currently getting by with an old monitor that we had sitting around. He’s shopped around and determined that $200 is about how much he’d have to spend to get a monitor with the features he’s looking for.

The email I received was from a popular online computer parts retailer. They were advertising a 23-inch high definition monitor, which regularly sold for $199, on sale for $139. Even better, after a $20 mail-in rebate, the final price of the monitor would be $119.

The problem? He didn’t have enough funds to take advantage of a great sale.

He did have $80, but he could’ve had more if he’d made different choices with his money over the last two months. I specifically remember him buying an online game for $30, as well as a new music album through iTunes within the last week.

I came up with three options for what I could do next:

1. Ignore the email

He doesn’t have enough money to purchase the monitor even at the sale price, so part of me wondered what the point would be of showing him at all. I could just wait until he’d saved up more money, and then alert him to any deals that show up in my inbox.

2. Loan him the money

It’s a great deal, and I could just loan him the money he needs to buy the monitor. Then he could pay me back over the next month or so. While this would enable him to get the monitor at a low price, I don’t like the message this sends to him about instant gratification. Not to mention, I’d essentially be teaching him to use credit to buy something when you don’t have enough money.

3. Show him the email

Lastly, I could show him the email. This would make him aware of the great sale he has to pass on because he prioritized other things over saving for his monitor. I don’t want to rub it in, and I’m not trying to tell him he can’t buy other things with his money. I want to make this a lesson because he specifically told me that he wanted to stop spending money on other things and concentrate on saving for his monitor — but then took actions contrary to his goal.

I went with choice number three. He did seem mildly disappointed that he could’ve gotten his monitor much cheaper. But he took responsibility for the choices he made, and simply told me to remind him of this sale whenever he wanted to spend his allowance on something else. In the end, he may end up paying full price for his monitor, or another great sale may come along.

In either case, I think the lesson he learned was well worth it.

Have you ever missed a great sale because you didn’t have enough funds available? Which course of action would YOU have taken if this were your child?

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{ 22 comments… read them below or add one }

stephanie April 3, 2014 at 5:37 am

Standing ovation for this!! Good approach by not doing it to be mean and not providing a bailout. I think this type of approach will stick with him! Well done, dad!

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Travis @debtchronicles April 3, 2014 at 3:36 pm

Thanks, Stephanie! I hope to continue the lesson by having him continue to look for deals, and helping him decide when exactly is the right time to pull the trigger on the purchase once he has enough money saved up. Thanks for reading!

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George April 3, 2014 at 10:28 am

I get that you’re trying to teach a lesson about saving and making wise choices, but this was a bad personal finance lesson. Or at least, you may have missed out on a more advanced lesson. I’m assuming that your son is a teenager and will soon have to handle more complex financial decisions. This was a great opportunity to teach him about using debt and credit responsibly.
Certainly the lesson of saving with a goal in mind is an important one. But he was already doing that, he was almost halfway to his goal. The monitor was discounted $60 (not including the mail-in rebate), that means he’s going to have to pay $60 more than he would have if he had borrowed the money and purchased it today. He seems committed to buying the monitor, so the goal should be getting the best possible price for it. Loaning him the money would have saved him a significant amount of the purchase price and given you the opportunity to teach him about interest and the need to pay back debts before they become problems. He would have needed $140 to purchase the monitor not including the mail-in rebate. If you had given him the $60 he needed to reach that amount, you could have charged him 2% in interest each month until he paid it back, or 24% annually, about what a credit card charges. Using simple (and therefore slightly incorrect) math, that comes to about $1.20 a month. You mentioned that he should be able to pay you back within a month or so if you had taken this option. It would have only cost him $1.20 to finance the purchase and save himself $60. That’s an EXCELLENT financial decision.
I think your approach is teaching him about saving and setting goals which are both good, but it might also be teaching a fear of debt or that debt is always bad. Fear of debt is pretty common in the USA today, but this is a great example of how responsibily managing debt is a good thing.

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David Ning April 3, 2014 at 12:39 pm

Let’s not be too harsh here. There could always be a better solution out there for any given situation, but I thought Travis did a good job. After all, not having that monitor and having the kid beat himself over it has some value as well.

Sure, he’s not learning any of the credit/debt lessons that you speak of, but there’s a chance that the teenager will not have the patience to listen to all the mumbo jumbo of interests/loans in clear terms once you tell him he’s getting a monitor anyway even though he hasn’t saved enough.

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Travis @debtchronicles April 3, 2014 at 3:42 pm

George, I can see where you are coming from, and I respect your opinion. However, with all due respect I would disagree that using credit to buy something that is 100% discretionary is a good use of credit. Given my own experiences with abusing credit cards, I would much rather teach my son the lesson of “If you don’t have the cash, don’t buy it,” and/or “another sale will come along.” In my opinion, using this specific scenario as a tool to teach him how to use credit would be reinforcing the message of immediate gratification that he is bombarded with every day. There will be a time and place to teach good use of credit, I just didn’t think this was the appropriate scenario. Different strokes for different folks. :) Thanks for sharing your perspective, George!

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David @ Simple Money Concept April 14, 2014 at 10:43 am

I agree with you, Travis. I think it’s important to teach your child the habit of spending only what you have, even though it’s costing more now. I think the lesson learned will outweigh the money your son could have saved. I remember this quote from Warren Buffett, “Chains of habit are too light to be felt until they are too heavy to be broken.”

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Travis @debtchronicles April 14, 2014 at 4:49 pm

Wow, I love that quote, David….I’m stuffing that away for later use and inspiration. Thanks for the comment AND the support!

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Gwen April 3, 2014 at 11:14 am

I agree with George, part of financial decision making is about making choices with the information at your disposal.

Regarding financing, you could also include how a lender evaluates a loan. If your son isn’t credit worthy, then there is a further opportunity for education.

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David Ning April 3, 2014 at 12:41 pm

I think it’s good to put the loan offer on the table, but I would try to keep it simple. There’s a danger of trying to take this too far, which ends up being super confusing for young kid.

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Travis @debtchronicles April 3, 2014 at 3:45 pm

That’s one way of looking at it, Gwen, but as I stated in my response to George, I do not think it’s appropriate to take out a loan (which is really what you’re doing) for a computer monitor. There will be a time and place to teach him about how credit works, but this wasn’t it (in my opinion). Thanks for weighing in!

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David Ning April 3, 2014 at 12:35 pm

I’m not sure what the right approach is, or what I would do given the situation. But here’s an idea: make an offer to buy the monitor for him, after he’s been disappointed, and charge him $180 (he’ll have to cough up his $80 + you loan him $100).

Tell him that he’ll have to pay you back, and that you will be pocketing $61 but if he takes the deal, he’ll save $19. There will be some lessons on interests and also the fact that those who have assets will be able to take advantage of opportunities.

This way you won’t feel bad for not getting something for the best price and your son can learn the valuable lesson too.

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Travis @debtchronicles April 3, 2014 at 3:47 pm

These sales are common, especially with this particular online retailer. Another sale will come along, and he will be much more appreciative of his purchase after waiting and saving for it. If he had no monitor at all the answer may be different…but he has one that currently “works.” The path chosen allows a lesson to be learned, yet still get a good deal on the monitor the next time one rolls around.

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Ruth Cooke April 4, 2014 at 8:13 am

I think Travis did the right thing. Bravo! And I agree with Travis that in this particular case, the sale will likely come up again, and that’s another lesson in itself–that many consumer goods are way overpriced, and if you miss one sale, it’s not the end of the world. Another one will come around.

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Travis @debtchronicles April 6, 2014 at 8:40 pm

Thanks Ruth! Personal finance is just that….personal – and there are likely several different paths here that would be great lessons to teach a child. It all depends upon what kind of lesson a parent is most comfortable with. The path that I chose may not be what others would choose, but I’m definitely comfortable with it!

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David Ning April 4, 2014 at 4:57 pm

Good point that you’ll likely be able to get the monitor at the same price point. From now until that next sale, I’m sure your son will be diligently saving up!

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Chad Empey April 3, 2014 at 3:53 pm

I think the third option would be wise if it was presented in a way that would make him aware but not afraid to make choices on his own. Also, more deals will come around. By the time he saves up for the monitor he wants it will probably cost less because newer monitors will have been made already (just a fact about the computer industry). Just a thought.

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David Ning April 5, 2014 at 9:48 am

Absolutely.

The fact that he’ll get a monitor with more features for the same price by waiting is a good lesson in and of itself!

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Travis @debtchronicles April 6, 2014 at 8:41 pm

the fact that more deals will come around is exactly why I chose #3, Chad. The monitor won’t likely cost less because a newer model will come out in this case, however….we’re likely talking about a matter of weeks – but who knows, right?

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Alex @ Credit Card XPO April 4, 2014 at 9:29 am

Interesting article. If I had to make this kind of decision, I’d probably show him the email, offer him a loan with simple term, then ask him if he wants to borrow the money now to get this deal or wait and use his own money.

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Travis @debtchronicles April 6, 2014 at 8:42 pm

That’s certainly an option, Alex….but as I mentioned in an earlier comment, I’m more comfortable with teaching my son the lesson of “if you don’t have the cash, you can’t buy it” – especially with something as discretionary as this. thanks for sharing your thoughts!

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Ann Simms April 7, 2014 at 1:29 pm

Some of the best advice for young kids is to save, but not fear investing. Don’t underestimate kids when it comes to money. If you teach them right when they’re young enough they can go far.

I own my own business where I sell checks online. I could have never done that had it not been for parents who taught me about money.

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Travis @debtchronicles April 10, 2014 at 4:48 am

Great point, Ann….I recently saw an article that asserted what kids should be able to do for household responsibilities at certain ages. I was initially astonished by what the author thought kids should be doing at such young ages…but you know, the author was right. There was no reason to expect more from our kids – they have the capacity to do much more than we give them credit for – given that we provide the correct guidance.

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