The Secret to Encouraging Mindful Money Decisions in Kids


Making Mindful Money Decisions


Recently I had my brother & his family come to stay, including Master 8 & Little Miss 5 (soon to be 15)

They were super excited about their trip ‘It’s the 1st time we can remember a trip to Australia & we’ve been saving’

Now these two aren’t novices when it comes to money.  In particular Master 8 takes money matters very seriously, even more so with his growing savings account and a very generous financial gift from his Abuela & Abuelo  (aka Lela & Lelo).

When it comes to money decisions Master 8 is most certainly in for the ‘long game’. Decisions are a serious business, involving much consideration, significant angst & a lot of toing & froing.

‘Is it worth it?’

‘Will I enjoy it?’

‘Will it last?’

A recent trip to Melbourne’s – Store of Requirements (a supply store for the budding Harry Potters & Hermiones of the world) showcased how serious a business spending money is.  Equipped with a mental list of what he wanted I observed Master 8 quickly succumb to a case of ‘Shoppers Overwhelm’ a condition suffered when you have limited resources (money) & way too many choices.

Miss 5 on the other hand is a ‘live in the moment’ kinda girl.  If it looks fun, she likes it & she has enough money then there’s a pretty good chance she’ll buy it.  Quality, potential longevity & value, are not factors that feature in her decision-making process.

One such purchase a squiggy smiley faced apple – clearly met all her decision-making criteria;

Fun ✓, Like it ✓, Affordable ✓ 

The only problem was within approximately 2 hours of said purchase, it had started to part at the seams.  After accusing her brother & a minor meltdown I was amused to find her (& said squiggy) up in my office doing a little DIY fix it job with my glue stick.  Ten points for problem solving and ingenuity.

Having witness these two polar opposite approaches to purchasing, I started to question how could we encourage a happy medium between the two purchasing styles? So kids learn to make mindful money decisions that they feel good about & will give them more than 5 minutes of fun.



SPENDING ON WANTS – It’s not all bad

Growing up we often hear messages that demonise spending, particularly if purchases are considered a want rather than a need.


‘It’s a waste of good money’

‘You don’t really need that’

‘It’ll only last 5 minutes’

‘We don’t have money for that’


Through these messages we subconsciously learn that our wants aren’t important & going without is more desirable. After all, these days it seems to be hip to be frugal.

As we grow older these patterns of devaluing our wants can impact on our happiness.  Through conditioning we’ve also learnt to put the price of something over and above our potential happiness & the actual personal value that purchase brings.


PRICE Vs VALUE – What’s the difference?

Let me explain.  Value & price are often used interchangeably when it comes to purchasing however when you examine them they are really quite different.

PRICE: an amount of money given, expected or required in return for acquiring something.

VALUE: relates to our personal values (funnily enough) it’s about the importance, worth, usefulness, or enjoyment something can bring to us. Which varies from person to person.

So making mindful money decisions is not just about shopping around, making comparisons & getting a great deal.  It’s also about Fun Ratioworking out somethings value to us beyond its price.  I like to think of it as calculating the ROI – your Return On Investment via our Individual Values Scale.

Let’s return to Master 8 & Miss 5 and how to help them start making mindful money decision.

For kids figuring out the personal value of something is tough.  It involves being able to think critically and having a strong sense as to what is important to them.  All concepts that are still developing at a younger age.  However, one thing that kids are expert in is having fun.

Enter the Fun Ratio – a concept I first heard about from Ron Liebers book The Opposite of Spoiled.



Basically the Fun Ratio estimates the hours of fun per dollar (euro, yen, baht, whatever your currency) spent that a purchase provides.


Here’s an example to give you an idea.

(We know this isn’t the simplest of maths so a little parental assistance or calculator will be required)

The higher the Fun Ratio value, the greater the fun, the more personal values an item has to a child.



Of course, this isn’t an exact science but it’s an easy way for kids to grasp the concepts of value vs price. It assign value to something focusing beyond its price & gives a nice introduction to making mindful money decisions.

If you wanted to get a little fancy, then you could include other variables (values) such as a workmanship/quality score or environmental impact. More about this in a up & coming post.

Through using the Fun Ratio kids learn spending on wants isn’t necessarily bad. Their wants are important. It teaches them how to be more discerning with purchases and provides a framework to help take away the stresses associated with making money decisions while hopefully helping get something that last more than 5 minutes.


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