Wednesday, October 12, 2016

Use Reimbursements To Condition Teens To Maintain A Spending Buffer

Teen Requesting Shampoo Reimbursement.

I’ve written before about how I like to use a simple reimbursement process with my teens to force awareness of how expensive everyday life is.

To recap: If I just buy everyday items for my teens outright, the costs are out of sight, out of mind. But if I make them buy the items first and request reimbursements from me afterwards, they can’t help but notice the prices. See more about my reimbursement process and policies here.

Beyond learning the value of a dollar, I realized there’s an unexpected extra benefit to the reimbursement system: it conditions kids to maintain a minimum balance — a “spending buffer.” Without it, they can’t buy the item in the first place. At least, not without some parental hassle.

A spending buffer is an excellent personal finance habit.

  • It wards off embarrassing declines or painful overdraft fees.
  • It serves as a mini-emergency fund. (Suddenly low on gas? Covered!)
  • It averts monthly fees for accounts that have minimum balance requirements.

So, try moving to a simple reimbursement process for the things you’re currently buying outright for your teens. They’ll get a financial education two-fer: cost consciousness and spending buffer savviness.

Want to turn these tips into action? Check out

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