What is Smart Spending?

What is Smart Spending?

Parents want their kids to build smart spending habits and make good financial decisions, but what exactly is smart spending? And how do you explain practical ways your kid can be smart with their money?


What is smart spending?

Smart spending is simply about living within your means. It can include making a plan for how you’ll use your money while saving for short- and long-term goals. Smart spending is also about managing your money and paying off debt responsibly.

Why is smart spending important for your child?

As your child earns money through an allowance or makes a paycheck at their first job, they will face many decisions on how to spend their money. They’ll likely want to spend it on toys, clothes, and other things that offer instant gratification. Teaching kids how to make smart money decisions from an early age can help them build good money habits over time. 



If your child understands the importance of spending wisely now, they’ll be prepared to handle more financial responsibility later in life. On the other hand, if spending habits go unchecked, they can quickly become a habit of overspending. Bad spending habits can lead to debt over time and less money available to take care of what your child really needs.

Strategies for smart spending

When you talk to your kids about how to spend smartly, connect different money ideas like saving and delayed gratification. Maybe they have their eye on a new LOL doll or the latest video game. Explain how they can use smart spending skills and save money now to get what they really want later. The fourth Money Missions topic is spending wisely, which teaches kids the difference between needs and wants and how to make smart spending choices.


Talk about how to set a savings goal and make a plan for their money to get there. A debit card for kids can help your child save money safely and track their progress toward money goals. Parents can keep tabs on their child’s spending habits and set spending limits with parental controls.


Here are a few more strategies for teaching your kid about smart spending:


  • Explain the difference between wants and needs and how to balance both.
  • Teach your child how to make a basic budget, which is just a plan for where they want their money to go.
  • Help your child understand the difference between short and long-term savings goals and how to prioritize both. 


Written by Kristin Yarbrough Published Jul 9, 2022 ● 2 min. read