I've worked in finance and technology for 28 years — this is how I teach my kids about money using their back-to-school shopping

It's that time of year again — back-to-school season is in full force, and families around the country are flocking to stores with their shopping lists in hand. According to the National Retail Federation, families with children in elementary school through high school will spend a record amount of money this year.

Back-to-school shopping presents a great opportunity to teach kids about money and the importance of budgeting. Putting kids in the driver's seat (with some adult supervision, of course!) can help instill ownership and prompt first-hand lessons in trade-off decisions.

This gives them ownership over what they're buying.
Rachel Askinasi/Business Insider

If kids pay themselves, they'll feel more ownership of the items they've selected and how much they're spending.

When it comes to teenagers, letting them shop on their own or with friends can teach them independence and accountability, which will bolster their financial confidence. Since clothes shopping can be especially painful with our teenagers, my wife and I tend to drop our teenagers off at the mall (with a friend or two) with the shopping lists we've agreed to, their phones, and their Greenlight debit cards (which have the budgeted amounts on them), and pick them up later! Everyone seems much happier this way, and we think it's a great way to help teach our kids to be independent and financially responsible.

A 2013 study from Cambridge University reported that kids are able to grasp money concepts between the ages of three and four. For those with younger kids, I recommend giving them a smaller list of supplies (perhaps five items) and making an effort in-store to locate those items, discuss the different options available to the child and introduce the concept of trade-off decisions. For example, you can get the more expensive My Little Pony pencils, but you may not have enough money left over for the markers you need.

I strongly believe kids learn by doing. Ultimately, they need to practice making spending decisions and have the ability to make mistakes in a safe, supervised way, so that they learn how to budget and make smart financial choices. Back-to-school season is a great time to teach important lessons that can become good, financially-healthy, long-term habits.

Tim Sheehan is the co-founder and CEO of Greenlight. Greenlight has helped more than half a million parents and kids manage their finances with their debit card for kids that parents manage by app. Prior to Greenlight, Tim was the Lead Entrepreneur in Residence at Georgia Tech's startup incubator, the Advanced Technology Development Center. Earlier in Tim's career he was Director of Yahoo! Finance, the SVP Products, Marketing and Strategy at Fiserv, and a Senior Manager for E*Trade Financial.

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