At What Age Should I Start to Teach about Money?

They call me “the Rebel” but I really am just a regular guy.  In other words, I am no James Dean – no leather jacket and no motorcycle.  I am just a family man with 4 young children and a beautiful wife who is a stay at home Mom.  I guess you could actually call me a “rebel with a cause.”

My family is my cause – what I work for.  I do love to help kids and educate them.  So as you can imagine, I am often asked questions about kids and money.  Some of the questions I get are:

At what age do I start teaching kids about money?  Should I give my children an allowance, and if so, should we tie it to chores?  What if they only do half their chores, then what?  What should I have my child pay for and what should I pay for?

I’ll give you my thoughts on the first one, and from time to time I’ll address the others in this blog.

At what age do I start teaching kids about money?

Truthfully, the sooner the better.  Children can understand the concept of fairness early in life (of course, their idea of fairness is everything belongs to them).  What you need to teach them is the concept of value.  Start with their toys.  Tell them they can play with one now, or if they are willing to wait (5 or 10 minutes), they can play with two.  At night, offer them the opportunity to sleep with one stuffed animal, or two other ones.  It may seem trivial, but you are teaching them things like delayed gratification and the idea of fair trade.  It’s not long after that they start to associate value in things that matter to them.  As soon as they know that a nickel is worth less than a dime, even though it is larger, then you are ready to start teaching them about money.

Some ideas for early money lessons with your children:

• Place a jar of coins in front of your child and allow them to “play” with it.  Let them feel the edge of a dime; let them admire the shininess of a new penny.  Show them how 5 pennies is the same as one nickel, and 5 nickels is the same as a quarter.  Just remember to never leave a child alone with coins as these can be a choking hazard.

• Help your child make three “banks” with the following labels: Saving, Spending, Charity.  Whenever they receive money as a gift, have them split it up into these three containers. (Learn more about the three “banks” idea on our podcast. -ed)
• Allow children to participate in financial decisions that affect the family.  Now I’m not talking about whether or not to refinance the mortgage, but more practical things like how often we eat out, where we go on vacation, or what things we do on the weekend.

• If possible, allow your children to see you work, and explain how that translates into things like food, clothing, and shelter.

• It may seem old fashioned, but encourage your youngsters to sell lemonade, rake the leaves, or walk the neighbor’s dog.  They’ll quickly learn the value of a hard day’s work.

These are just a few of many things you can do to help your young ones grow into financially responsible adults.  Please feel free to share some of your own ideas, and if you have any other questions you’d like me to address.