Teaching children about money starting at a young age is essential to them becoming financially responsible adults. Even young kids can learn about money. If you are teaching a three year old to pick up toys, teach them a little about money too. For example, if they pick up ten toys off the floor in their room, give them a small amount of money (perhaps a penny or nickel per toy). Get a jar or piggy bank and let them put the money in it (putting it in something see through is a good way help them learn visually). Educational toys that teach counting money are also beneficial.
Once a child reaches the 9-12 year old range, it is a great time to open a savings account (if you haven’t done so already). Help them fill out deposit slips and take them with you to do their bank transactions. Be sure you show them their bank statements. As they become teens, you can increase their responsibility.
Allowance or no allowance? This depends on the parent, but the majority of parents will pay their child for chores in one way or another. Even if a child is paid for chores above and beyond what is expected of them, make sure to set guidelines for the child to save a minimum of 10% of what they earn.
The three most important money rules to teach a child of any age (Of course,the sophistication of the lesson will be age appropriate.) include:
Save-40%
Spend-50%
Give-10%
The percentages above are suggested amounts and can be adjusted as needed.
Teaching children about money is an important life lesson no parent should ignore. The payoff will be having a financially responsible adult child.
*Information contributed by Genworth Financial. All opinions are 100% my own.
Very smart to teach your child about saving early. I had an allowance growing up, but once I got a job, I had to give half of what I made to my parents to put in savings for me. I’m surprised how much it really added up during my teen years. Glad they put that money away for me!
So true! When my son grows up, I want to make sure he knows how to manage his finances.
I love the idea of giving them a little change per toy they pick up! My 3 year old is already saying “Me buy that” and I think it is time to start teaching him about money!
We use the same percentage breakdown for our son’s “commission”
Back when I was in grammar school, our parents had the option of sending money in weekly to be put into a bank account, at a local bank. Although it wasn’t much $1 or $2 week – it added up. Us students loved to see what we had in our accounts when we got the passbook back later in the day.
I love your article. It is so important to start children out at a early age the value of money. The picking up your toys idea is a great way to teach them and get there rooms cleane as well!
Thanks for the article. I just opened bank accounts for my children yesterday. It is very important to teach them about finances.
I love the percentages breakdown, and we’ve been applying this for quite sometime with my kiddos and it’s been great! It’s fantastic advice!
Great tips on teaching children! I know my 2 year old loves putting money in her “penny bank”
Great ideas, we’re always preaching to our kids about saving money