Early Money Lessons

I cannot recall the exact moment that my daughter and I had our first talk about money. My guess is that it probably occurred about the same time that she realized that she wanted something. Once kids start asking for things it is impossible to avoid discussions about money.

My wife and I try to keep things as simple as possible for a 3 year old (“3 and a HALF” as she constantly reminds us these days). For young children the values of earning, saving, planning, and working hard are the most important things to focus on. Here are some basic guidelines that are generally helpful for young children:

Take the time to talk about money. Explain to them how you pay for things at the grocery store. In very basic terms you can walk them through the buying process. Let them pay on occasion. This is also a good social skills activity.

Start an allowance once they reach grade school. Choose a set allowance and set basic guidelines for their expectations to receive an allowance. This is a great opportunity to help them start managing money.

Reward saving. If your child wants something it is important to give them a chance to save for it. Even if you have not started an allowance, younger children can use their piggy banks as a personal saving account. Take them to the bank and let them count their money. Then use the reward process to let them purchase something they have wanted. Delayed gratification has its benefits.

Be a good role model. You do not have to feel like a financial genius to model positive financial behaviors for your children. However, you do need to feel comfortable with money and be prepared to practice what you preach when it comes to money matters. If you are not completely comfortable with managing your money, take the time to learn. Your personal financial situation will benefit and your children will be observing smart money related behaviors such as budgeting, saving, planning, and avoiding debt.