We’ve officially been helping parents teach their kids to think before they buy for three years now. During that time, we’ve had the privilege of witnessing many an “aha moment,” such as:
- When a child begins to understand that they probably overestimated how much they will use a new toy (e.g., probably not 1,095 times, a.k.a. seven days a week, twelve months of the year, for three consecutive years…) or
- When a ‘tween realizes how much they have underestimated the total cost of going to a concert (which really requires money for safe transportation, snacks, and souvenirs, in addition to the ticket price).
We love these moments of awareness because we know they lead to the development of money-savvy youth. What can we say? We are FLGs (Financial Literacy Geeks)!
Although people seem to enjoy the clear and simple format of the DIMS-DOES IT MAKE SENSE?® SCORE Calculator, we’ve come to understand that a small glossary of terms might be helpful for uninitiated first-time users. So we’ve prepared the below-noted. Consider printing it off and placing it on the fridge or bulletin board. When your kids ask you what “that list of words and definitions” is for, you can tell them it’s the “Gifting Sense Glossary,” written to help make learning about money even easier than we’ve hopefully already made it.
From all of us and ours to all of you and yours, we wish you a very Merry Christmas, a Happy Hanukkah, and the healthiest of New Years. In 2019, let’s continue to give kids everywhere one of the best gifts ever: the awesome power of spending with a plan.
The Gifting Sense Glossary
Price: The amount of money a store charges for something it sells.
Sales Tax: An amount of money, in addition to the price, that is added to an item’s total cost. Sales tax is charged by the government but collected by stores. The government uses collected sales tax to pay for things like roads, schools, and hospitals. Sales tax rates vary by province or state.
Shipping: The amount of money, in addition to the price, that a store (online or bricks and mortar) charges for boxing up and mailing or sending what you have bought to your home by delivery service such as UPS, FedEx, or DHL. Shipping rates are often a function of how big the item being shipped is and how quickly you want it delivered.
Duty: An amount of money, in addition to the price, that may also be added to an item’s total cost. Duties are like sales taxes in that the government collects them. They are added to the cost of items crossing an international border, e.g., between Canada and the United States. A duty is designed, among other things, to encourage shoppers to purchase locally-made goods versus imported items made far away. Rates vary by the type of good, e.g., clothing versus sports equipment.
Cost-Per-Use of an Item: The total cost of an item, including sales tax, shipping, and duty if applicable, divided by the number of times you anticipate using that item. If the total cost of a new jacket is $50 and you think you will wear it 50 times, the cost-per-use is $1.00. The lower the cost-per-use, the better, as this means you are really using what you have bought or asked someone else to buy for you. The DIMS SCORE® Calculator automatically calculates the cost-per-use of an item.
Total Cost of an Experience: The total cost of an experience includes all the money that is usually spent to enjoy an outing, concert, or sporting event. This includes safe transportation, snacks, and souvenir costs, for example, attending a professional hockey game, in addition to the price of a ticket to the game. The DIMS SCORE® Calculator automatically calculates the total cost of an experience.
Return Policy: What are a store’s rules for replacing an item or getting your money back? Can you get your money (versus a gift card?) back if you change your mind or are disappointed with something? Does it still have to be tagged and unworn? You always want to know a store’s return policy before you make a purchase.
Warranty: What are a manufacturer’s rules for replacing an item or getting your money back? What will the company that makes what you bought do if your purchase doesn’t work the way it is supposed to or stops working altogether in a short period of time? Will they replace leaky rainboots? Will they fix an oven that doesn’t bake? You especially want to understand a manufacturer’s warranty for larger purchases that will be expensive to replace or repair.
DIMS – DOES IT MAKE SENSE?® SCORE: A score between 1 and 10, that young people can calculate (by answering simple questions about typical purchases), to help them understand if a possible purchase makes sense for them and their family, before, anyone spends a dime.
Think Before You Buy: Four words that encourage young people to develop strong “financial defense.” Financial offense is earning money. Financial defense is spending the money you earn with a plan. To learn to think before you buy, practice answering simple questions about typical purchases at GiftingSense.org
Additional terms encountered throughout the DIMS SCORE® Calculator:
Phantom Costs: Costs you don’t anticipate when you buy something but may have to incur to take care of or enjoy an item or experience. For example, a new dress you end up needing new shoes for or a toy that regularly requires replacement batteries.
Re-Stocking Fee: Is there a small charge to return an item, designed to cover the cost of repackaging it and replacing it on store shelves?
Carbon Footprint: The amount of energy (electricity to power factories, fuel for transportation) used to produce and deliver an item or experience.
Values: The things you and your family believe are important to uphold as you live and work. For example, “In this family, we always pick up litter or think before we buy!”
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