Thank you to my friend Neve for penning this thoughtful piece on raising money-savvy kids. As I strive to teach Red the value of $1, I’ve used some of these tactics and am exploring new ones. At what age do you begin giving an allowance? Do your kids earn their money or do you help them learn to save with a weekly amount? I think Neve has some great ideas that I’m going to start implementing, especially the three money jars and tips for Scarlett as age appropriate. Affiliate links may be used.
Money is officially the biggest cause of stress in the world. Yikes! As parents, we want our kids to grow into happy and secure people, and so teaching them good money has never been so important. Here are eight tips for raising money-savvy adults while keeping the focus on fun.
1. Pretend shop (age 2+)
Toddlers learn through imitation As they see Mama and Daddy shop, they naturally copy the process as they play at home. During this stage, don’t feel the need to teach the ins and outs of money. Provide a simple toy cash register and some non-choke-able toy money and stand back; you’ll be amazed at how much they are learning through osmosis alone. We own a compact pretend play kitchen, which has provided hours of playtime. You can often find these in resale shops or at garage sales for a low-cost.
2. Real shop (age 3+)
Young children love to get involved in grown-up things. This is perfect for getting them involved with money early on. They may start by giving by paying and receiving change from shopkeepers. Next, give them $2 when you go shopping and ask them to purchase some fruit of their choice. They’ll get the hang of exchanging money for goods, and will begin to learn about value; eg: their two bucks get either four bananas or one melon.
3. Give them a modest allowance (age 4+)
Owning money allows kids to learn more about finance and responsibility. Try giving a modest allowance without placing conditions on it. Afterall, it’s great if chores can be done from a place of personal responsibility and contributing to the family home, not simply for personal gain.
4. Spend Save Share (age 4+)
Saving is one of the most important habits we can help our children to develop. Piggy banks have been around for thousands of years but a lovely new idea is Spend Save Share jars. For example, every Friday we give our 4-year-old daughter $5. One dollar goes into the Spend jar, one into the Save jar, one into the Share jar. She then gets to choose where she puts the remaining $2. The money in the Spend jar, she uses when she likes to buy things such as stickers, rides or snacks. The Save jar is where she tries to save up for something bigger, say a toy that costs $20. Finally, the Share jar contains money that she will donate to charity or to a friends fundraising cause. Make sure that charity is fun and relates to your kiddo’s interests; if she’s into animals, then go to an animal rescue center and ask if you can buy them something they need.
5. Open a bank account (age 6+)
Kids thrive on responsibility and doing “grown-up” things. Opening a bank account is a perfect example because it allows them to embark on long-term saving goals. Whether it’s a pro scooter or an Xbox, if your child saves for it, they will develop a wealth of good qualities such as delayed gratification, personal responsibility, and respect for property. You can make the experience more visceral and tangible by putting up a “saving poster” which visualizes their target amount and how much they’ve saved.
6. Shop at a farmers market (age 4+)
If you can, it’s a nice idea to take children to a farmer’s market. Give them a budget and allow them to buy a few bits. It can help them to develop a sense of where things come from, and they’ll be introduced to the basics of an economy; for example, work leading to produce which is then exchanged for money.
7. Encourage work for money (age 6+)
While I’d avoid their allowance being dependent on chores, it can be great to have an additional, distinct “job” that you are willing to pay them for. In our family, it’s washing the car. Explain that you are prepared to pay for this service. Either you’ll get it done at the car wash, or, if your kiddo is eager and willing to do it properly, then you’ll pay him instead. This empowers a young person to save more quickly for a goal while also teaching them the relationship between work and money.
8. Let them run a yard sale (age 9+)
Fuel their entrepreneurship and business acumen by giving your child the leading role in your annual yard sale. Depending on their age, this will require some supervision but the more responsibility they have the better. Involve them deciding what to sell and for how much. Agree how to split the profits – they might get 100% of the money from their old toys and 30% of anything else. Now stand back and give them room to negotiate with customers and manage the transaction.
The average household credit card debt is $5000 and the number one cause of stress is money. It’s more important than ever for our children to know about value, saving, and delayed gratification. The good news is that kids love responsibility and will jump at the chance of doing grown-up things. This means that teaching good money habits can be a lot of fun for the whole family and you’ll end up with some money-savvy kids!
Read more from Neve at WeTheParents.org where she seeks to bring out the humor in parenting and gets nerdy researching and reviewing the gear that moms and dads (apparently) need. You can also catch her on Facebook and Twitter.