Price < Total Cost!
Do you remember when you first realized that items cost more than their price tag? I can remember when my son first had that realization. He was 8 and wanted to buy a skateboard with some birthday money. We searched online for the skateboard he wanted – found it – and checked it out. But when we got to the screen where you pay, Sam noticed that he now needed $59.38 for a $39.99 skateboard. What was happening, he wanted to know.
Show your kids the math.
This was before free shipping had become almost standard if you were willing to wait – and we lived where sales tax was 6%. I took him through the math, where $39.99 times 1.06 became $42.39, and then showed him the $16.99 shipping and handling charge for someone to box up and mail him the skateboard – which brought the total to $59.38 – a $19.39 increase over what he thought he was spending.
I will never forget him saying to me, “OK—but you will pay that, right—the sales tax and shipping?” In an instant, I heard my own mother, in a very similar moment, albeit years ago and not when we were online, saying to my sister and I, “Do I have a Sales Tax Fairy who pays these costs for me?”
It’s a classic parenting moment. You struggle to find the right balance – between not wanting to rob your kids of the thrill of making a much-anticipated purchase with “their own money” – and knowing that a golden teachable moment has dropped into your lap. At 8, I knew Sam wasn’t ready for a huge talk about how sales tax revenues pay for things like schools and roads or even for listing all of the costs of doing business that necessitate shipping and handling charges. But he did learn about the difference between the price of an item and its total cost that day.
Part of the Gifting Sense Origin Story
Who knew then? Experiences like this probably led to Gifting Sense, where we turn shopping for back-to-school clothes and equipment, as well as birthday and holiday gifts, into a tool to help people teach their kids to think before they buy. Working on a problem that matters to them in real time makes learning about money immediately helpful to young people. Financial information needs to be relevant to be helpful.
Sam is older now and always considers the total cost of an item he is looking to purchase, which, of course, includes sales tax, shipping, and, in the case of cross-border shopping, even duties. He’s getting pretty good at budgeting and understanding the true value of his requests. He calculates the DIMS-DOES IT MAKE SENSE?® SCORE before he spends his money, or ours! He knows well how much safe transportation, snacks, and souvenirs can add to the cost of attending a concert or professional sporting event.
Many of these lessons began way back when he first realized that he needed a Sales Tax Fairy to help him purchase a small, unremarkable, but memorable skateboard. How are you teaching these lessons in your family?
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Child Development Financial Literacy
