09 September 2008

Introducing money management to preschoolers

Autumn has a great idea for teaching preschoolers about money:

The best way to start out is to make money as concrete as possible. When my children were first given an allowance, they struggled to understand that $1.00 was the same as four quarters. So, we made a handy conversion chart for them using a flat cardboard box. Inside, on one side we glued a dollar, a quarter, a dime, and a nickel. On the other side we glued four quarters, two dimes and a nickel, two nickels, and five pennies. The side-by-side comparison showed the kids how to exchange their bills and coins for other denominations. It took practice and parental support, but they eventually got it. Making money concepts concrete really seemed to speed up the process for them.

Preschool Money Manager Kit

If you're looking for a little more guidance, the folks behind the Portland-based Tessy & Tab Reading Club have put together a fabulous Preschool Money Manager Kit. It includes an array of colorful charts and lists (all printable from the web site, by the way), three Tessy & Tab books about basic financial topics, and a seven-step parent guide, and a sturdy cardboard save/spend/share bank called the Moonjar Moneybox kids make themselves.

I can't say enough about this little kit. It's well-designed, the advice is sound and encourages independence, and it does a perfect job of taking abstract ideas and long-term goals and making them concrete. I think it's a great value at $24.95. And while they peg the age range at 2-6, these concepts are good for just about any kid and parent. I intend to use it with my kindergartner (That's right! She's no longer in preschool!), and I'm sure my 3rd grade son will love it, too (he can't wait for her Tessy & Tab books to come in the mail). A great product, and an awesome gift.

Win it! Wayyyyy too long since we had a fun giveaway. Judy, the very kind co-founder of the company, will gladly send a Preschool Money Manager Kit to one lucky Parenthacker! To enter, leave a comment with your answer this question:

How have you taught your kids about money (so far)?

If your child isn't yet allowance-age, just give us your best tip from childhood, or anything else you think is relevant. I'll pick the winner at random tomorrow at 5pm PST. Good luck!

Your comments

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Our not-quite 2 year old just told me that he needed money before we went to Target so I made him some pretend dollars, quarters, and pennies (because he uses them to ride the horse at the grocery store). Once he understands a few more numbers, we will talk about how many dollars it takes to buy x.

My parents never really talked to me about money and I have terrible money management problems to this day. We hope to correct this with our son.

We finished the Dave Ramsey Financial Peace U in December. We immediately made up a little chart with 2-3 things per day that my 2 and 4 yr old could do each day to earn money...clearing the table, bring me the garbage cans from all over the house to be empties, to empty the silverware from the dishwasher into the drawer, things like that.

Each task was worth one quarter with the possibility to earn about $3 per week. The first dollar ALWAYS goes to church; everything after that is theirs. We haven't started making saving mandatory yet.

They also have the option to refuse to do their tasks - hopefully the lesson being "no work, no money" LOL

My two year old has somehow managed to already figure out the very minimum number of things he has to do to give his $1 to church and have exactly enough for one bag of candy per week! LOL

My 4 yr old seems to love it and this system has taken the struggle out of "can I have that?" and "can I have that?" every time we go somewhere. I simply say "did you bring your money?" and, if not, that generally settles it.

One other interesting observation: the first time my 4 yr old had earned $2 to spend at the local Dollar General, it took her (no lie) FORTY-FIVE minutes to pick out just the right thing since it was HER money she earned and she was spending. LOL

My four yr old has also become an awesome sale/clearance bin shopper! LOL She already knows that she can get more for less by shopping where the "special" signs are! LOL

We finished the Dave Ramsey Financial Peace U in December. We immediately made up a little chart with 2-3 things per day that my 2 and 4 yr old could do each day to earn money...clearing the table, bring me the garbage cans from all over the house to be empties, to empty the silverware from the dishwasher into the drawer, things like that.

Each task was worth one quarter with the possibility to earn about $3 per week. The first dollar ALWAYS goes to church; everything after that is theirs. We haven't started making saving mandatory yet.

They also have the option to refuse to do their tasks - hopefully the lesson being "no work, no money" LOL

My two year old has somehow managed to already figure out the very minimum number of things he has to do to give his $1 to church and have exactly enough for one bag of candy per week! LOL

My 4 yr old seems to love it and this system has taken the struggle out of "can I have that?" and "can I have that?" every time we go somewhere. I simply say "did you bring your money?" and, if not, that generally settles it.

One other interesting observation: the first time my 4 yr old had earned $2 to spend at the local Dollar General, it took her (no lie) FORTY-FIVE minutes to pick out just the right thing since it was HER money she earned and she was spending. LOL

My four yr old has also become an awesome sale/clearance bin shopper! LOL She already knows that she can get more for less by shopping where the "special" signs are! LOL

so far my 3 year old knows that if she finds coins on the side walk, she can put them in her piggy bank. and then wash her hands. and my 1.5 year old knows not to put coins in her mouth. most of the time.

Our daughter is 2 and a half and she LOVES paying for things. When we go to Target, I sometimes give her a dollar and we pick something out from the dollar spot and talk about how much things cost. She understands more and more that you have to give money to get something at a store, and sometimes things cost more than you have. ;-)

She also thinks all we have to do is drive to the bank and "push the buttons" on the ATM to get more money. I wish.......

I love the idea of a spend/share/save bank and want to incorporate that into our teaching. Now is probably a good time to start. Thanks for a great link and giveaway!

My daughter has a piggy bank that she puts all of her money in, but she hasn't quite gotten the money idea yet.

However, we have been teaching her economy with the "screen time" ticket hack:
http://www.parenthacks.com/2007/05/ticket_system_k.html

We give her 4 tickets a day. The first couple days after we introduced the ticket system she burned through all of them and then whined for the rest of the day. Since then, she has learned to save some for the end of the day. We will soon switch to a weekly distribution system.

The funny thing is that she refers to money as "tickets."

We have been discussing that we should probably start teaching our 3yr old about money. About the only thing my parent's taught me about money was that they helped me open a checking acct when I was 16 and taught me how to balance my checkbook. I somehow came through with good money management skills, but my sisters are horrible about money management! We want to be better with our kids about teaching them.

Reading some of these comments, I realize we need to get on the ball with our son! He'll be two next month, and his only concept of money is the loose change we leave for him next to his piggy bank so he can have the fun of dropping the coins in. We do take the pig to the bank occasionally, and, because he's so young, every single cent of it goes into his college fund. When he's older and starts understanding money, we'll make it a 50-50 split, college fund and "fun" money. That's how my mom was with me with my jobs in high school -- half was for college, half was for me. It was good practice for saving as an adult!

But I could really use this kit. My husband and I are both good with money but I'm not sure how to teach that to our son.

We talk about money and choices a lot. We were JUST talking this weekend that it is time to take it to the next level. We are very lucky so far that neither kid has ever asked for anything by name yet. (3 and 4 year old boys).

When I am out shopping with my 4 year old I try to teach him how to get the most for the dollar. When we are looking at snacks, he may want the Cars fruit snack but I will show him that another brand might be cheaper (or we can get more for slightly more). If he insists on a particular brand I tell him that we will have to wait until it goes on sale. This is what I try to do with most everything, but when you get to toys that's another ballgame and I just say no or maybe he will get something like it for his birthday or Christmas.

This sounds like a great system! The other day, I found my husband trying to teach our 2yr old about commodity futures. Seriously. I told him that we need to teach her about nickels and dimes first. We obviously need some help here!

We've got a "commission chart" (ala Dave Ramsey's Financial Peace Jr kit), and encourage the kids to earn extra money with extra chores. We also have then help with grocery shopping and couponing!

Could always use new ideas for our 3, and would love to see this kit. Thanks!

My 2.5 year old loves to pay for things, and has a piggy bank which he will put found money in. He doesn't really get the different denominations yet, but understands that the big shiny quarters sometimes work in fun machines :)

We're just starting him with the cash register so far (2yrs)...

He's interested in money... so we'll probably ramp up soon...

I like this kit because of it includes the "Share" category. When we started an allowance with my children we felt strongly that Saving and Sharing had to both be taught. It has been pretty successful for the most part. The other success has been planning and saving for a short-term goal. They pick something they have been wanting and then save up for it. This has been crucial in letting them feel in control of their money and have a sense of pride and accomplishment in managing money well.

I haven't done much with my little ones, but I remember clearly some lessons from childhood. I remember the time that my Dad brought home the entire paycheck (he was paid once a month) in cash. He divided it among the 4 of us, and had us pay all the bills. One by one - the house payment, charity, electricity, phone, gas, food, car funds, everything we could think of. I think we ended up with like $20 left over. It really sunk in that when my mom would say we needed to save up for something, we understood where she was coming from. Looking back at things, I think my Dad may have padded some of the costs so it looked like we had less at the end, but the idea WORKED for sure.

we're just starting w/ my 2 year old -- letting her carry money and "pay" for things. Although she does have a activity "tote book" that has a "credit card" that she likes grabbing and using -- hmmm... maybe I have to use cash a little more!!

Our eldest two (of 3 girls; 4.5, 3, almost 1) haven't expressed any interest in having their own money yet (thank goodness, because when they hit their teens, I'm doomed). But my wife and I have already talked about using the 80-10-10 approach (80% to spend, 10% to save, 10% to give to church/charity). I, for one, did not get much training about money management from my folks and as a result I fairly suck at it. I've struggled to gain control of my spending habits to reform our family finances and I want to give our children the tools they need to avoid this situation.

I've started buying groceries with cash to keep me within my budget, but I use our credit cards as debit cards a lot because of the rewards. I make a point of telling my 2yo dd that the cards are telling money to be taken from our bank account just like when I take the dollars from the ATM.

We are teaching our 4 year old using banks. He has a ceramic pig bank for quarters and a money jar that count money for the rest. I empty out my daily cahnge on the counter for hin to "find" and ask me if he can put them in his banks. This is allowing him to learn to pick out different coins while learning what each one is worth. We are working with coins now. Next we will do a chores list for coins. We have a bag of items he can buy from so he doesn't think he can always buy something at the store every time we go.

Oooh! If I don't win it, it will be a good birthday gift!

How I've taught him about money?

Well, a few different ways but I think the most long-running "bit" is just me, being probably more transparent than the average parent is about money.

I let him see me work with the budget on the computer. I let him see me put the grocery money in an envelope labeled "groceries" and put a few bucks in the one labeled "fun" last.

The only part he doesn't see is me moving things around savings. But he has his own piggy bank.

He also has monetary consequences. If he breaks a friends toy, the $ to replace it comes from his piggy. Stuff like that.

He just started Kindergarten but I'd love for him to see this kit.

At one point I considered getting him this:

http://www.babyscholars.com/mosapiginpis.html

Then I realized he HAD 4 piggy banks so we just have diff ones for diff "accounts". Not very meshed though.

For their birthdays, our kids have the choice of either a birthday party or $10 per year old they are (example, my 9 year old just got $90). We have them pay 10% to our church, and the rest they are able to spend. We talk about what they would like to buy, how much things cost, and then they are able to narrow down their choices. We encourage them to put a little money in the bank too, in case down the road there is something else they would like to buy, and don't have enough at the moment.

Very interesting ideas! I have a four year old that I have been trying to introduce the idea of saving and planning to. I hate to say to him "Mommy doesn't have the money." or "I can't afford that" because that isn't always true and even if it is it isn't really the words I want to use to explain the saving process or spending process to him. Hopefully I can help teach him how to best use his money wisely.

This kit would be very helpful! I'm also keeping some of the comments in mind - lots of great ideas!

I have three children ages 7, 5 and almost 3. All but the 7 y.o. believes that our debit card hold an unlimited amount of money, and I think that's simply because our eldest understands basic math principles. All of our children are given allowances every week that they fulfill their responsibilities (posted on a the fridge as a reminder). My eldest will save her money and has wads of cash stuffed in her purse. My 5 y.o. begs to take her money to the 99-cent store and buys junk. My youngest, usually loses his coins in the house. I definitely need a consistent system - help!

All my kids (now 6, 4 and 2) have and understand the "piggy bank", up to and including searching the house for randomly dropped coins. The oldest understands that she is often given money for birthdays, Christmas, etc, and has recently learned how to total it up and decide what to buy.

I've got a what NOT to do. DON'T feel like making the child spend their own money is somehow bad, and that you should always buy it for them. My wife and I are still having this "discussion" (ahem) and she insists, even when my daughter spends her own money, on paying half. I keep arguing that you're just teaching her that things only cost half what they are actually worth, but I keep losing that battle.

Also, when they're old enough, let them buy lunch at school. As long as my daughter keeps referring to the price as "two dollars and one quarter" I know she hasn't quite gotten the hang of it yet.

I haven't done much to teach my 2 year old about money. Whenever she finds change around the house, I encourage her to put it in her piggy bank. Also she does know that we have to pay for things at the store.

Super smart idea! Start 'em young!

We just talk about money. How much things cost, how we make money, etc...
If we are planning to let her get something at the store we usually give her a limit of say $3. Then we make a game of finding things she likes that cost $3 or less. It's a good way to learn more than and less than and it keeps her from begging for things that are obviously out of her price range. It's a good game and we hope to start an allowance this year to reinforce the lessons of saving for a goal.

One of the most important lessons I've wanted to teach is delayed gratification.

A vivid example we've used is buying candy. When the 4yo boy gets his 2 quarters for the week, he can use it to buy 1 package with 2 peanut butter cups at the checkout. OR, he can save it till next week and use his 4 quarters to buy an 8-pack from the candy aisle. If he can wait and save up just one week, he gets 4 times the amount of candy.

This helps them carry over to other areas, like "We can buy this treat now, or we can wait for it to go on sale and buy more."

I have a long way to go, but have been trying to make sense of money issues with my 5 year old since he was 2 or so. He still thinks that if something is too expensive we should just go to the bank and have them "give us" more money! So, we've started talking about bank accounts, etc. It is tricky stuff, and I remember never quite "getting it" when I was younger, either.

Both our 5 and 3 year olds have been exposed to the concepts of money, but we haven't laid out a lesson plan for them to fully grasp it. We are also FPU graduates, and want to pass on sound financial wisdom to our kids so they might avoid some of our mistakes. This kit looks like a step in the right direction.

I think the best way to introduce your children to money management is saving but that's boring even fro adults. But I think the stock market is a valuable tool that can be used to teach them about something that most people don't learn about till adulthood. When my 18 month old is old enough I'm going to teach her about the stock market and investing and teach her how to research companies, and allow her to make investments with her own money.

Another site that was just announced at TechCrunch50 today aims at 5-18 year olds learning about money.

http://www.appscout.com/2008/09/ithryv_online_banking_for_kids.php

Our 5 yr old doesn't receive allowance yet, but will probably start soon. I did a similar comparison chart about a year ago.

In this day of cashless transactions, I've found it important that he understand what money is even used for. We talk about how our money is at the bank. When someone pays us to do a job, they send money to our bank. When we pay with a credit card, it tells our bank to give money to the vendor. We talk about how virtually nothing we use is free... that it requires direct work or money.

Our five year old gets $2.50 a week (half her age; it will go up each birthday) which is dependent on her doing some simple chores like taking her plate to the sink, putting her clean and dirty clothes back where they go, cleaning up her toys, etc. If she doesn't do a chore and I have to do it, I "pay" myself out of her allowance. (So far only the threat of this has motivated her to do the chores.)

We have her give 10% to church and she saves the rest until she wants to buy something. I no longer buy random toys; she has to decide if she likes it enough to part with the money. Recently she decided it wasn't worth it to spend $30.00 (she doesn't have that much, so she'd have to save for a while) on a toy; she'd rather wait and get it for Christmas.

Oh, and the two year old goes to the Dollar Store when his grandpa gives him money. Until we go, I save it for him. :-)

I've always discussed with my son, now 3 years old, whether any given toy was "expensive" or "not expensive". (This being one of the ways we decide together if it's something we can get.) I think he's getting the idea. Daddy took him shopping the other day and came home with a Buzz Lightyear toy. I asked him if Daddy bought it for him and he said, "Yes! Because it wasn't too expensive!"

We use the Savvy Pig http://www.msgen.com/assembled/money_savvy_pig.html to save money and give 10% interest each quarter on savings. So far we've skipped the investment section. He can choose a charity each quarter and count the amount, put it in an envelope and give it or send it away himself. We started this at age 6. His 4yo brother just adds money to a piggy bank without much understanding of what it means.

When I was little, my Mom used to let me sell my toys in our yearly garage sale and then use that money to buy toys at garage sales throughout the summer. Not only did it teach me to manage my money, but it also taught me not to hang on to old toys that I had grown out of.

I only have a 2 month old, but it's great to read up on all these great advice. This is definitely for the teenagers, but before I went to college, my dad told me that if I choose to get a credit card, be sure to pay off the balance every month.

My daughters know that they need to put some money in the bank and offer some to church. The rest is for them to use as they wish - usually they set a goal related to a vacation we have planned. Also, by shopping with me they ask "is this on sale" or "do you have a coupon for this mom" I love when I hear those words come out of their mouths!

my 4 yo has a piggy bank - and we count the money together (how many pennies, nickels. etc.) Sorting is also an age appropriate activity.

With my 3-year old, we worked on $$ skills and potty training all at once. For every success on the potty, she got a sticker on a chart. After 5 stickers, she got a quarter. After 4 quarters, she got to go to the dollar store to buy anything she wanted. So now she understands that 4 quarters = $1.00.

My four year old gets paid her allowance of four dollars every other week when I and my husband get paid. We have just opened a passbook savings account for her so she can get used to using a bank to put her money away. My banker suggested sending her a "paycheck" with online bill pay but so far we haven't done that, mostly because I want her to see you have to put the money in to get it out again.

We have been giving her an allowance for a year now (she started at 3 dollars every pay period) and allow her to spend it on whatever she wants. The thing we are trying to teach her at this point is just the basics of how transactions work, i.e., if you don't have enough money, you can't buy it.

She is now saving up for a movie out of her allowance after a discussion of financial goals. I expect there to be bumps on the road as she learns that if she spends all her money she doesn't have any.

We haven't done much with our 2 year old son yet. Whenever he gets money from his grandmas for birthdays or whatever, we put it in his bank to save if for something special. I'm not sure how much he really understands yet. This sounds like a great product!

My little one is almost two, and I've already given a good deal of thought to how to introduce money to him. This kit is just in time for an early start.

We haven't done much with our girls yet (5 and 3). I do feel like the 5 year old is ready, but not sure how to start!
When I was a kid my parents put 1/2 of our allowance into savings. By the time I was going off to college I had enough to buy a car. Nothing fancy, just an A to B car. But it was mine, and I didn't have to borrow a cent from mom and dad.

My three-year-old isn't of allowance age yet, but my husband and I have started introducing simple economics to her by explaining how money is used to buy things and discussing ways not to waste money.

i haven't taught my 5 year old much, but i see that i'm falling behind now! well, what we have taught her is that money should be taken care of. we encourage her to put any money that is given to her by relatives, on her birthday, or found on the street or in between the sofa cushions, in her piggy bank. the money collected there has always been used for our yearly trip to disneyland since she was born. that is enough encouragement! but now i think i will start to give her chores and an allowance and teach her more from there on.

I have to admit that I thought our three year old was too young to be taught about money. However, lately I have noticed that she was watching intently whenever I paid for things like groceries and seemed to understand my explanation that we couldn’t take the groceries until we had paid for them. Now it is probably time to introduce an allowance.

When we go grocery shopping we compare prices and talk about sales deals. Sometimes we take our daughter to a dollar store and she's allowed to spend certain amount there.

Our not quite 2 1/2 year old is really interested in money and buying things. Besides showing her coins and talking about their value, we play store with a Fisher-Price cash register. I even gave her some of the many fake credit cards that come in junk mail so she can use those.

Our eldest was always very into coins and money of any sort, so it was easy to parlay that into allowance and savings - save, give, spend, and invest. The usual four categories. He learned that investing was a great way to make money grow, but over-investing meant no cash flow in the here and now - so he's developing some balance on it. We encourage him to explore the options, and make his own choices, then think about how he feels about those choices later - if he took money from a long-term goal, was it worth spending on a short-term goal? How much of the delay in the long-term was worth it? How much was not? We also let them work on credit for a little while (Mom and Dad credit) so they could see how spending on credit was borrowing from their future self, with interest. (The future self didn't like this so much...).

There are tons of opportunities to teach this stuff. At preschool level, only one of our kids was even sorta interested, so far. But one more (one of the twins) may be starting to pay attention...

We use the Money Savvy Generation Cash Cache for his saving strategy stuff, which is a fine one for the older kids (10-14 or so).

We've not done too much with money for our 3 yr old yet. My parents (still) always said "we can't afford X" and then would buy Y. I always though it was completely hypocritical. I never tell my son that we can't afford something. Instead we emphasize saving to buy something different/better/more fun. We emphasize having to make difficult decisions because we can't have everything.

The biggest thing my parents taught me was about the power of interest. Why it's so important to pay off credit cards each month and why saving early and often will pay out big rewards. Once I started working (in high school) I started getting some presents in the form of IRA contributions.

We have done little to teach our son (just turned 5) about money. We're planning to give hime an allowance next month. We need to something serious. He keeps asking when we have enough money to buy a new house. He needs perspective about how much things cost.

We give our six year old girls allowances of a $ each/week - they get to save a quarter, put a quarter in charity and get whatever they want to do with the rest of the 50c....at first, they used to spend it but are now learning the power of saving and adding money :)

My oldest has just gotten the idea that money can buy things and that we have some! LOL! But to teach him that you can't just buy whatever you want whenever you want - if he has a legitimate request, we set up a reward system for him to earn it (he has to save up points). :) We've also been play-roling what happens when you pay with a credit card so that he doesn't think it's just a plastic card that pays for everything by itself. :)

We haven't done much yet with my 2-y.o. daughter, although she did loudly remind me to pay before leaving the grocery store a few days ago... Other shoppers found that quite entertaining. I am actually quite stumped about how to convey financial matters to her, given that so much of our finances is electronic - I rarely carry cash.

While my son at 2 is not yet ready for allowance, we do teach him the value of money and interest. Even though he might get the lesson, Ryan (my boyfriend) empties out Ethan's piggy bank once a month, and then explains to him that because he had such and such amount we The Bank of Mom and Dad will match him 10%, he is careful to explain that he will not find a 10% interest rate at any normal bank, but because we love him and the math is a lot easier for a 2 year old (like even that is easy anyway) this is percentage we have decided on.

We also make it a point to explain the pricing of all items he asks us for, and explain that because he only has this much in his piggy bank he still needs X Amount to buy it himself. Since the piggy bank is not actually for spending we also put these items on his Wish List, which we email to relatives for Birthday and Christmas gift ideas later.

We explain every tiny detail about everything we do, and we don't talk to him like a child most of the time. People look at us like we are insane sometimes but I think talking to him like an adult has really helped his speech and understanding of the world. He is certainly attentive regardless!

Money at our house: the 8 year old craves it, the 6 yr old loses it, and the 5 year old plays with it. So to this point we are allowance-less. We have talked about implementing something, but so far we're at a standstill. A money program would definitely help!

My kids are a bit too small to fully understand numbers as of yet, quantitatively speaking. But my oldest is getting there.

We've started the money discussion by talking about how we get things from stores and where money comes from and why we can't get everything everyone wants but how we should save our pennies... vague, but effective in starting communication

to help my 6-year-old understand how much things cost, i try to put it in terms that she can understand. for example, when she wanted to sign up for an expensive "princess" summer camp i told her that, for the same amount of money, she could (potentially) buy 200 ice cream cones or see 40 movies or go mini golfing 36 times or go swimming at the town pool 66 times. she was shocked and decided it wasn't worth the cost.

We are only just starting an allowance for our 7 year old now. And the 4 year old earns money sometimes.
I think the most important thing we have taught so far is that we don't impulse buy. If there is something in a store that we had not been planning on buying, we don't buy it. We go home and think about it. This applies to everyone in the family, parents too. If we are going to Target for clothes, we only get clothes, not any of the other great stuff you could easily convince yourself you need.

These are some great ideas. We have specifically stayed away from the money for chores because we want our son to learn that the family is a team and we all take care of the house and we all share in the spending. But that has left us with the question of how to start our son on the idea of spending/earning. I look forward to using some of these ideas.
So far I've let him take the money he gets from family (birthday cards etc) to the store and pick out what he wants. I hate having to explain sales tax though! lol He's only 4.

Our daughter is a whole seven months, so this hasn't come up yet. Heh.

My parents always talked to me about the value of saving and investing. They were good role models. I hope to be the same.

When we sold my 4 y.o. son's tricycle, he was able to go shopping for a toy with the money. He had to make a choice between different items as his funds were limited. He also shares his money through giving at church on a regular basis. One more tool: I use the hack I read here about giving him a Chuck E Cheese token as an incentive to get dressed by himself in the morning. Once he earns 20 tokens we go see Chuck, with a 10 token bonus from mommy. It took a while for him to earn his 20 tokens for the first trip, but now we are going every couple of months or so.

Great and timely topic. We are planning on starting an allowance for our daughter when she turns 4 in 2 weeks. So far she has some money from these sources: I exchanged money for candy last Halloween, I think 5 cents for each piece turned in. She kept some and traded some in. When my second daughter was born I was worried about coins-in-mouth and choking so I told my then 2 year old firstborn she could keep any coins she found lying around our house, on the floor or sofas etc. And she's been given small amounts of money for various rewards. Don't really know why she's so into it (yet) since we've never taken her to spend her savings, anywhere.

We are thinking of starting her at $1 a week and attaching some basic responsibilities (jobs?) to it, maybe beginning with just getting dirty clothes into the hamper rather than the floor, and not leaving shoes and clothes in the middle of the hallway. Think the bar is high enough to start, or should we ask more of her?

We let the kids help us when we count money. We did a lapbook about money and banks (it's a homeschooling thing).

One thing I like to do is point out how commercials are deceptive. Starting very young, we told our kids that some commercials lie and some use tricks to make things appear better than they are. It's worked quite well. We don't hear too much of, "Buy me that," because our kids will say, "It's not worth the money because they might be lying just to get us to buy it."

If one child breaks something of ours or something belonging to a sibling, we will have the breaker pick something of theirs of somewhat equal value to sell to make up for it. It has helped them realize that things have a value.

I'm afraid my primary lesson about money has backfired. Our 2.5yo daughter knows that Daddy works hard away at camp to make money; we use that money to buy things. But last week she grabbed too many wipes and I told her "Please don't waste them. Just take two." She burst into tears and sobbed "Daddy can't come home now!"

Looks as though I could use some guidance.

My son is learning that once he spends money, he can't have it back to buy something else with. I think that's important, he's four.

He's also learning that play money is not real money, much to his chagrin. LOL

My wife and I have used a combination of sing-song, guide books and an allowance.

The sing song is things like counting rhymes: "Twenty five, Fifty, Seventy Five, One Hundred."

The guide books are a frequent reference for her. When given her allowance, or when asked about money, she often wants to check the book and look at the photos. From the reading above, I need to do more of this tactile work.

Finally she gets an allowance. Every week she gets five cents for each chore on her chore-board per day. Each week we talk about how much money she gets in nickels, the total amount of money, and then she has to help me figure out how to give it to her.

On a slightly off topic note - I also use money to get my 5 year old interested in history. I frequently show her the Presidents on the money and ask her to identify them, and then tell them about their history.

Our son is 2.5, and we have just begun talking to him about money. I have been reading with interest the column Love & Money in the WSJ as I feel it has been great to think ahead to what issues will be in our future (alas, the column ended last week!) Mostly, we play "going to work" at home and he comes home with "money". I have some play money I plan to introduce soon, and he has a play wallet with pretend credit cards (since we use these more often than cash, he is more familiar!)

I think the one thing I've really gotten across to my 4 yr old is that if he wants something he has to earn the money for it first.

It's amazing to see what he'll vacuum and wipe floors for, and what he decides in the end isn't worth it.

we have a great bank for our young daughter that is divided into three sections: spend, save and charity. my daughter already loves playing with the bank and when she is old enough, my husband and i will certainly talk with her a lot about each category and why all three are necessary and important.

This is a fantastic idea and I would love to receive the kit for my two year old. She knows, by watching Mickey Mouse Clubhouse, that sometimes you need "coins" to buy things. Whenever she sees "coins" in the house, she wants to put them in her piggy bank. But I would love to start teaching her more about earning, saving, and spending from an early age.

like some of the other parents here, these comments make me think it's time to start introducing our 2-year old to some money management ideas. So far all we've done is collect up the coins from around the house and drop them in the piggy bank.

I work at a very popular children's toy store and I have to say that I've seen just about every type of child money management technique on the planet. I have to say that I think having kids save and spend their own money at the store is the best way to go. It's really fun as an employee to see the kids' sense of pride when they tell us that this has been something they've been saving for (and sometimes they'll even bring in a full sticker sheet, chore chart, or report card to show off as well, which is also really fun). Additionally, the children who have their own money to spend are almost always the best behaved children in the store. They are far less likely to throw a temper tantrum or whine incessantly, which makes for an enjoyable shopping experience for everyone (including the employees!).

I've been teaching my 3 1/2 year old by taking him with me to the store, showing him prices, letting him play with coins and trade coins for goods.

My 3 year old understands the concept that coins go in her piggy bank. I am about to begin teaching her some money concepts. This kit could be fun!

I take my two year old shopping with me. He is starting to understand that everything has a price and is curious on how he can get money of his own.

We are taking "Financial Peace University" a Dave Ramsey course, through our church. Actually, we already took it and succeeded with it so now we are LEADING the course. Anyway, our 3 year old gets a commission. She has 3 jobs that need to be done over the week: Feed the dog, take your plates/cups to the sink after meals, and fold/put away her own laundry. She gets $1 for each job done. She loves it! Then, we have a save bank, spend bank and a giving bank and she puts her dollars in those banks accordingly. I'd love to better teach her the value of each quarter, nickle, dime, etc.

We have been teaching our 5-year-old about money separately from doing household chores. We believe chores are things we do to support the family, as a family. If she does something extra—like helping me go grocery shopping, raking leaves, or matching our socks—we give her money for those things.
This gives her a choice about earning money. There is no choice about picking up her toys!

My 3yo loves to play cash register, and she understands that you need money or a credit card to get things from the store, but that's about it so far.

When I was in grade school and I asked for a particular toy, my Dad would offer to pay half if I could save up my allowance to pay for the other half. He would offer extra chores so I could earn the money a little faster, but I can still remember the feelings - the wait seeming to take forever, and the pride when I finally had enough. I'm still a saver and delayer-of-gratification today, traits I'd like to pass on to my girls.

Wow! So many people have commented. Two different things, we plan on doing a commission thing with our kids. But, when I was in Junior High for a couple of years my Mom figured out how much money she spent on the different categories for us and gave that to us for allowance. The cool thing was I had a huge allowance, the bad news was I was expected to pay for everything including clothes. My brother learned the hard way that buying the super cool new shoes, anyone remember pumps, was not a good plan, when it took 3 month of his clothing budget and he outgrew them before 3 months was out.

My son is 18 months old, but he has only gotten as far as "Mine, mine MINE!!!" in the grocery store, pointing to whatever it is he wants. I talk to him about money and using coupons, i almost never buy anything without a coupon, and he is usually very patient when we go though the checkout.

Whenever our 10 year old gets birthday or Christmas money, half of it goes into savings for her college fund (or for very special occasions like a small extra amount of spending money on a family vacation) and the other half can be saved or spent as she likes.
We don't believe in attaching household chores to money, because we as parents don't get paid to do our household chores either- it's a mandatory part of being our family, and everyone does their share of chores. We have offered money for "extra" help at times, but on the whole we don't pay for normal household duties.

prompted by the giveaway to delurk... A nice tip I learnt from my cousin for managing the kids' allowance: Every allowance they get they need to donate 10%, invest 10% save 10%, the rest is left to the child's discretion.

When I go shopping, I try to show how many dollar bills it takes to pay for an item. I also let my daughter pay for things, though it's harder to get across the concept that money isn't an ever-reproducing resource. We have worked some with donating a part of the money she has (giving a little extra at McDonald's, enough for and ice cream cone, then the rest is donated to the Ronald McDonald House box in front of the register). Teaching our kids about money is something that is really important to me - I would love to have the tools to really map out a curriculum about it.

That Mom and Dad are TOTALLY serious when it comes to the stuff.

My son is only 16 months old, so he is more on the "where is your nose?" level than "how many nickels in a quarter?". But he knows that when we go to a store he doesn't always get to bring a toy home, and he doesn't get to keep the toy trains that he plays with at the library.

We are deliberate in teaching our 2 year old that he can earn money by helping out at home. He brings the garbage cans in from the street and gets a quarter. He is still clueless of the value of a quarter though. He DOES know however, that the change on top of daddy's dresser is free for the taking! Hmm... what lessons am I REALLY teaching my kids?!?

I still remember when my sister was teaching me multiplications with blocks. Some things stick. Hopefully I can get money management to stick with my little one.

We are trying to teach our 9 and 5 year-old sons about money by giving them a weekly allowance, half of which is spending money for whatever they choose (with approval), and half goes into a savings account at Bank Mom'n'Dad. They can't touch it for a certain period of time(haven't decided exactly - 6 months, maybe?)and every month, they are paid interest. We hope this will teach them how saving can really pay off!Eventually, I would like to work giving to charity into the mix, too.

My 3.5 year old has been exposed to the concept of money by learning which coins are quarters, pennies, ect. Soon, once he gets that down with no trouble, we wil add in what makes a dollar.

When my son was 2 1/2 he wanted to buy a Thomas train every time we went to the store. So we made a "money jar" and talked about how trains cost money and that he had to start saving his pennies to be able to get another train. Daddy is very good at dropping change and he would look for change on the ground, the Easter bunny would put pennies in eggs, etc. After about 3 months (which is about a year in toddler time) we took him to the train store to get his train. Now he understands, somewhat, that we have to buy toys and that we cannot always get everything we want immediately.

My son is 2.5 yrs old, and the best way to teach him about money is help him realize that I'm gone for most of the day to make money to buy the food and toys that stuff that he wants. Also, when we go to the ATM or use a credit card, I make sure that he knows that it isn't magic, but that we can use these cards because I go to work!

My parents were great about teaching my brother and I about credit, always emphasizing how it affected every aspect of your life. They also help establish a credit history for us early on by applying for a credit card when I was young (I think I was 14-15?). Then they would purchase all birthday/Christmas presents for me on it, and pay off the balance immediately. This, along with the fact that they opened a bank account in my name early on as well, helped establish a long and stable credit history for me by the time I was applying for my own credit. I plan to do the same for my kids!

Coming from a family of 4 kids and one income, we were taught at an early age to earn money and save it. Chores were required and we received no allowance. If we wanted spending money, we had to earn it ourselves, so we delivered newspapers, babysat, shoveled snow, brought newspapers to recycle, etc. When we were older, we finally bartered with our parents that we should be paid for our good grades, so for As and Bs, we received money and Cs (god forbid) we deducted. My mother also taught me at a young age to open a savings account and to scour the papers and compare CD rates. Knowing how much work it took to earn that money made me less likely to part with it and to really appreciate it. My mother also taught me how to compare prices at the supermarket, to look at the sales racks first, and to buy the best quality items we could afford rather than crap that would break easily and need to be replaced. The only downside of all this was the emphasis of saving and not allowing yourself to enjoy the fruits of your labor. I'm now trying to figure out how to share these lessons with my 3.5 year old, but also to teach him to appreciate money without being a miser :-)

All coins to my son, 3.5, are "pirate gold", he hasn't gotten the concept of paper money yet and as bad as I am with money I know I have to get going on teaching him about money.

My parents were very good with money, and taught us to be responsible with it, but since I really had all I needed, even though I was made to save for the big stuff I wanted, I tend to overspend and buy lots of things I could do without and now shopping for kids is so much fun I try really hard not to get in trouble. Thank goodness my husband is a saver so it balances out a bit but I think we all need to learn a bit more about managing money and if I can start now maybe my boys won't have the same problems that I do...

My five-yr-old wants *stuff* so we started giving her a couple of dollars a week, if she does 10 chores per week (eg putting her plate in the sink after dinner, picking up her toys, putting away silverware from the dishwasher). That's less than 2 chores a day to get an allowance. Since we instituted this system in April, she's earned her pay maybe twice. Something is obviously not working!

The Tess and Tab kit looks cool. I'd love to try it free!

We've just started to work on this in our house with our 4- and 5-yr. olds. We'd rather not connect an allowance with daily chores & family responsibilities, so instead we tie it to bigger jobs like cleaning out the car or helping with the recycling once a week. When one of them asks for something special, we talk about if they really need/want something, how much it costs, whether we can get it second-hand or it must be new (like a kit), and whether they'd like to save for it or put it on their birthday/holiday lists.

Like some other commenters, we also do not say "we can't afford it," which both sets of our parents did, and which both of us remember with some bitterness. We didn't learn anything about money or responsibility, and it always seemed so arbitrary! We want to do much better with our kids, and encourage them to be healthier and more informed about this subject than we were.

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