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.

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!

Comments

[Moira]

I also wanted to add that we Freecycle, Craigslist and ebay, and have gone to yard sales and flea markets (boot sales in England...oh, how I miss you! ;-)) with them since they were babies. They have no issues whatsoever with things not being brand-new or in boxes, and I think this will also help them to understand the value of "things" (and the money it takes to get them) now, and in the future. They already know that we have gotten many things for free or very short money, and that we've passed along items that we no longer need, and that makes us very happy.

[Rick Francis]

Our son is almost six and we have been doing a lot of different things.
We have a few games that use money that help him learn to make change. I also have him count his own money so that he understands the value is the same for pennies and a nickel.
We have been encouraging him to save in a few different ways: First he gets paid for keeping his room and play areas clean as well as doing extra chores like cleaning the cat litter. That chore pays more because it's unpleasant. We will purposefully not get him all of the toys he wants- right now he wants to save $40 for a toy he currently has $2 and I am encouraging him because I think it is great to have a big goal.
When I read articles about money I try to share the important points with him. He understands spending less then you earn already. I also tried to show him how compound interest can make a huge difference- but I think that is still a bit over his head.
Finally if he mentions something wrong I correct him. At one point he suggested that I should pay for something by credit so that I didn't have to have the money for it. I quickly corrected him saying that I still had to pay and if I didn't pay the credit card bill on time I would have to pay even more!

-Rick

[Shea]

I have a 10 yr old son and an 18 month old daughter. For my son, I have given him an electronic ATM savings bank. He puts all his tooth fairy money and allowance in it. He knows exactly how much he has. When we go to Target or Walmart, he wants to look at the toys. I have explained that if wants something, he will need to save for it. After a few years (and his urge to spend it as soon as he gets it), he is now learning the concept of saving for big things :) Woohoo!

[Bezen]

When I was little, my parents let me buy whatever I want with the money I save, so I was doing everything possible to keep my piggybank full, including paid chores around the house or at my grandma's.

[Maureen]

my boys are 3 1/2 and the only thing we've taught them about money is 1) to start giving names to the various coins and let them put them in their piggy banks, and 2) telling them something is too expensive so we can't get it.

Thanks,
Maureen (jnomaxx at hotmail dot com)

[Tamrah T.]

My son is only a preschooler yet, we have started teaching him basics. Since he has no concept to coin value yet, we have him earn pennies for each task done at home. He has five tasks/ day. That can earn him his five cents times 5-7 each week to equal 25 cents plus. By the weekend he can have enough saved to purchase something. And since a quarter doesn't always go very far, we take him to a few yard sales where he can afford something. He really enjoys the reward(s) for his "job well done" and learns he can't always afford everything. These are just a few small scale lessons but, eventually the concept(s) will be learned.

[Tiffany (Life on the Road: Home Business, Homeschool and Cats!)]

I have been lately working with my oldest (14) on money management, with a plan borrowed partially from Mary Hunt's "Debt Proof Your Kids" and in part from "Financial Peace, Revisited." Not about counting coins, but learning the other kind of "value" of money!

[ERIN]

My daughter is 2, so we haven't really talked about money yet. When I was young, we would all be involved in clipping coupons for groceries. When we used those coupons, my mom would match that amount and put it in a piggy bank, after a while we would use that money to do something fun like go to the water park, or go out to pizza or something. The more we saved, the more money for fun stuff!

[Heather Lynne]

My parents used basic white envelopes to help us keep track of our money when we were really young. They were labeled with savings, charity and spending money.

[Mandy]

My 4 year old wants a very expensive doll and we don't have any special occasions coming up. We usually spend $5 a week on a toy, so I have began giving her the $5 a week to save for the doll. Once she saves half, I will chip in the other half. I hope this helps her to understand that she might have to give up some things that she'd like to have for something really worthwhile.

[Megan]

My daughter's only 3, but she knows that money needs to be earned. Apparently "earned" equals "asked for" at this point, but we are working on it!

[Michelle]

We put change and $1 bills in the Easter eggs for my then 2 year old. Who needs that much candy? She will turn 3 the end of this month and she still has money in her ziplock bag. If we go to a yardsale or to a store and she wants something I tell her sure she can buy it if she has enough. So far she bought a large bag of lollipops and a play cell phone. We will add some of her Birthday or Christmas money and see where it goes. The rest goes in her savings account. So far it has worked since she has not asked for an Ipod or Gameboy. And I don't feel like I am being nickel'ed and dime'ed for a bunch of cheaply made toys that just make more clutter at home.

[Dana Terrell]

For our family finances we're on the Dave Ramsey plan and use a cash envelope system. So my three and a half year old son has his own set of cash envelopes for his money. To make a cheap cash envelope system for him, we took a coupon organizer and put letter sized envelopes labeled Spend, Save, and Give into it. He's still a bit young to be buying a lot of stuff at stores, but he has a great time pretending to buy drinks from the fridge, etc.

The cash envelopes work well for family expenses as well because when the "Out To Eat" envelope is empty, we're going to be eating at home tonight. The kids can physically see the empty envelope, which is easier to understand than just saying "We don't have the money right now." or "That's not in the budget."

[Emily]

My twins are still to young to start learning about money ... but I love the idea of having several jars they can use to distribute their allowance, when they have one. One jar for savings, one for a charity, one for spending ... and whatever else they can think of!

[Polly Klein]

We have a horse bank that neighs each time my three year old daughter puts a coin in it. When she finds loose change she is delighted to be able to make the horse make noise. But, I'm certain she doesn't have a clue that she is actually saving.

[Alex]

My tot is too young for money management yet but when I was young when I REALLY wanted something my parents would have me save for part of it. This made me really think about what I wanted in the long term rather than instant gratification. Plus it helped me learn to set goals and work for something. I paid for part of everything from a big sucker at the drug store to my bike.

[Anna]

We haven't done any particular money lessons yet; I've been struggling with a good way to start. My daughter just started kindergarten, and although she has a piggy bank, we've yet to discuss anything concrete other than "don't waste that, it costs money!" Her kindergarten teacher has a cool trick though: every day they count the number of days since school started and translate that into monetary denominations. After five days they exchanged pennies for a nickel, for example. I'd really like some ideas for teaching money concepts at home.

[Laura GF]

My daughter knows her dad goes to work to get some money, she knows we spend money on goods and services. I keep thinking that we should start an allowance for her so that she doesn't just think cards are the only way to pay...

[Tiffany F.]

I love that idea! I want to make a chart for my 4 year old son. He's not too interested in coins right now. He loves the bills though. He has his own wallet and whenever family gives him loose change or a few dollars, he puts it straight into his wallet. He likes to save up for legos. We haven't bought him any toys since he's gotten this wallet for Christmas, last year. I'm still trying to teach him the value of money.

When I was younger, I loved to buy colored pens from the Hello Kitty store. My Dad would give me a few bucks everytime we went to the mall. Whenever I picked something out, he would say, "Ask yourself three questions: Do you need it? Do you REALLY need it? Or do you REALLY REALLY need it??" Ever since then, my Dad's voice always sticks in my head whenever I want to go shopping and I refrain from buying.

[Susan]

My daughter isn't old enough quite yet - but my nieces all received a bank split into 3 sections: savings, checking and donations. Then each week their allowance was split by percentage into the three areas. It taught them how to save and how to split up different amounts...

[Trina]

I use a web site called hotcouponworld.com where the members of the site (it's free) work together to come up with the best deals each week at various stores such as Rite Aid, CVS, Walgreens, etc. On the Rite Aid forum the members find the best ways to combine sales, coupons, and rebates to get items for free or very cheap. I have not paid for anything so far. I started on May 30 and I've collected over $1200 worth of toiletries, etc., for charities such as shelters and food banks.
My three-year-old daughter has started to "clip coupons" for dog and cat food and organize them in her own coupon organizer. But she thinks she is getting coupons for actual pets and wants to know when we are going to buy her a dog! She also has me write down lists for her so that she can remember what to get. Her lists look something like:
1. Dog with pointy ears.
2. Dog with short tail
3. Black dog
etc.
It cracks me up.

[Sara in Austin]

2 things:

The sound of money "plunking" into the piggy bank is fun

A lot of the stuff you buy at stores (in this case a squishy tomato) breaks (deflates) before you've gotten your money's worth.

[Amy]

We decided to give an unconditional allowance to our children. They can do extra chores (besides their regular chores) to earn more money. Each child has a charity, college saving, and two spending jars. One spending jar is for big ticket items, the other is for everyday, anything you want spending. As they get older, the big ticket jar will be at their own discretion.

My mother-in-law used to buy and keep the big ticket items until he had saved enough money. It was like credit, but more like lay-away since he didn't get the toy until it was paid off. They kept track of the amount owed in an old check register.

One last thing we have found with our daughter, if the money falls and is lost because you're playing with it, it stays lost.

Isn't money fun? ;)

[david sellers]

currently, we have our 7 year old collect money in his piggy bank toward some goal. currently he is collecting enough for a Nintendo ds.

[Jenn]

My daughter gets $1 a week for an allowance. She can also do extra chores for money and is currently saving for a camera.

[patti]

Our kids get one dollar for each year, on a weekly basis (so that's $5 for the older, $4 for the younger).

They each have three jars marked "Spending", "Savings", and "Charity". As it stands right now, they're each putting 20% into the Charity jar and 40% into each of the other jars.

One arrangement we've worked out now that school has started is that if they want to buy books from the ubiquitous book orders, we'll match them dollar for dollar. We hope it will encourage them to spend wisely *and* to enjoy books.

Right now they're saving their charity money to donate to Heifer International (they're hoping to buy some ducks for a needy family), and we are encouraging them to think of their "savings" money as untouchable for now (later, we'll take them to the bank to set up savings accounts, or possibly allow them to add it to their 529 accounts for education).

The girls made their first joint purchase last weekend, splitting the cost of a $1 toy at a garage sale. On the way home we talked about how great it was that they worked so hard at their responsibilities around the house and could reward themselves with a fun new toy to share.

[Griffin]

Have I taught my kids about money management?
My daughter is 30 now and she is teaching me about it.

Although when she was young, I didn't teach her that much, not having been taught the skills myself. You see my daughter is first generation American, my mother is Czech and she didn't have any money skills to pass on to me. Nor money for that matter but boy can I barter with a chicken. ha ha ha
I am much wiser now, not so much in handling money, and my grandson is 3 and granddaughter
just turned one, the sad part is now that I am a bit wiser,I am too far away from them to pass on any wisdom or wisecracks. This sure would come in handy for 3 generations. I did teach my daughter back in 1980 or there abouts to NEVER EVER say, "It's only $29.00 or $10.00 or $1.98"

[Christy]

My oldest, 5, has just started to show an interest in buying stuff at the store so we have been talking about starting her on an allowance. We don't want her to tie regular chores to pay (I think there are some things everyone in the family should do just as part of the family) but have been finding odd jobs around the house for her to do to earn some money when she asks. So far I've had my cabinets washed, my baseboards dusted, and a bookshelf reorganized by size of book. We're still in discussions about just how to handle saving/giving.

[Emily]

Our son is nearly 2, so no allowance yet--but I know that we won't tie money he gets from us to household responsibilities, since he's part of the family and we all do things to help our house be a nice place to live. When we go shopping he loves to hold things I've picked out (today it was well-sealed packages of safety pins, being purchased for tagging a bunch of his outgrown clothes that I'm selling at a consignment sale that benefits a program for low-income moms--as he's watched me sort through his old toys and clothes hopefully he's learning about the value of reusing things that are still in good shape and about sharing what we have with others) and is often reluctant to hand them over for scanning at the checkout. I tell him that "we have to pay for these things before we can take them from the store," which I hope will help him understand that things in stores cost money (we can't just go to the store and take whatever we want), and also that things at the store belong there until we've paid for them i.e. an early lesson in not taking things without paying.

[Denise]

My oldest two had an allowance and they also had a work agreement that they would sign. Each year we would sit down together and evaluate their work contract to see if they would get a raise in their allowance. To teach them the value of a job we included in their contract the right for Mom or Dad to hire the other sibling to complete a job if was not completed. If Mom or Dad had to hire the other sibling the money would come be deducted from the forgetful sibling's allance. We also insisted on our children paying for any "extras" that they wanted. This included movies with their friends, skating, and "wants".
The oldest is out on her own now and we have an 18 and 4 yr old at home. Our 4 yr old is now learning the value of money. She gets a small allowance and already knows that she has to save money for "extras". A few weeks ago she wanted a set of pompoms from Walgreesn. She asked her Daddy if he would take her there to see how much they cost. Then she came home, counted her money and asked to be taken back so she could buy them with HER money.

[Lisa Jordan]

Doesn't every lesson involve Pokemon? It seems that the money lesson is best taught through the inevitable request for Pokemon. My 2 sons get 20 cents for every family chore they do. (Cleaning up their mess is not a family chore.) They have figured out that 5 chores = $1 = one small pokemon pack if purchased in China Town off the street. Saving their chore money for a few weeks can mean a big box or another large toy. I'm still trying to work out the savings bit - beyond its relevance to 100 more Pokemon cards in my house.

[Ingrid]

My five year-old's eagerness to have a lemonade stand is making it possible to teach her about money; counting money is especially tricky to get. We're also starting her allowance now that she's in kindergarten, and she's looking forward to buying things that would normally go on her Christmas/birthday wishlist.

[coach outlet]

A great part to the information I have was acquired by looking up something and finding something else on the way .

[office 2007 key]

there a way to convince a 18-month-oldMy wife and I are still having this "discussion" (ahem) and she insists

[office 2007 key]

My wife and I are still having this "discussion" (ahem) and she insists, even when my daughter spends her own money, on paying half