The Concept Of Value For Money

Karen Payne Sledge,CFO at SledgeCraft, Inc., came up with a wonderful idea in terms of teaching kids some basic money management concepts. Please consider the following guest blog to see how Karen brings some aspects of "value for money" into the discussion:

One aspect of teaching kids about money is teaching them how to spend money, or how to shop wisely. One concept I've taught my daughter is to estimate a cost-per-wearing for clothes or a cost-per-use for other items. For example, if she is shopping for a pair of jeans, she needs to ask herself if she is looking for a "basic, wear 3-4 times a week all year around" pair, or a "these are kind of faddish, can only wear with my heels with certain tops twice a month in only the summer" pair.

Say she found a basic pair for $75, which would work out, conservatively, at 3*52=156 wearings for a year, divided into $75 = $0.48 per wear. Then say the faddish jeans were on sale (also taught her to be wary of buying stuff you don't need, just because it is on sale, but that's a lesson for another day) for "only" $25. This would work out to 2*3=6 wearings for a year (summer), divided into $25 = $4.17 per wear. So in this example, the more expensive jeans are the better buy.

I'm happy to say that I've seen her put something back that she tried on from the sale rack that was only maybe $10 or $12, but it was late in the season, she thought she could only wear it a couple of times before putting it up for the season, and thought it was too faddish to still be in style by the same time the next year, making it $5 or $6 per wearing.

The point is that sometimes paying more money is the better buy and sometimes the lesser price is better. It depends on the level of quality required for the expected number of wearings and how lasting is the style.