We give our two daughters, ages 6 and 4, loose change and a dollar bill here or there, but they always play with it or lose it. They don't understand the value of money, nor are they ready for allowances.
I have helped them decorate their own money jars, hoping to inspire savings habits. I have used charts and graphs to show them the amount of money saved, and have encouraged them to save toward "something," but they continue to play with their money.
They have to learn the value of a dollar, and how to give to charity and "pay taxes" (give money back to us that we put in their savings jar). I want them to become responsible with money. I know they are still young, so I don't have to panic yet.
First, some words of reassurance: No, you don't have to panic. Yes, your children are still young, and it's normal for them to see money as something fun to play with.
Preschoolers are too young for an allowance. I don't think parents should even consider one until age 6, when kids start to learn about money in school. But every child develops at a different pace, and if your 6-year-old hasn't yet grasped the idea that money can be exchanged for other things, don't worry. Hold off on the allowance until she cares more about it.
Remember that any instruction you give about money should be age-appropriate and engaging. Decorating money jars is great for kids this age. So is letting them use money to buy ice cream from a vendor. On the other hand, they're still too young to grasp the idea of paying taxes. As for the charts and graphs -- ugh!
Encouraging your children to save toward "something" is too abstract. Goals should be more specific, and ideally the kids should come up with them -- toys, games, books, things to collect.
When your daughters mention something they want, suggest that they save their own money (in their jars decorated with a picture of the coveted item). Make sure it's not too expensive, so it won't take long to meet the goal. When they have enough cash, take them to buy it.
As your daughters grow older and want more stuff, they'll catch on to the idea of saving. Keep up what you're doing. By the time they're 11, you'll be amazed at how well they can manage their money.
© 2010 The Kiplinger Washington Editors, Inc.
Learning Center content provided for informational purposes only. Northfield Bank does not provide tax or legal advice. Please consult your tax and/or legal advisors regarding your particular circumstances.
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