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Reader Question: Tips Wanted for Teaching Young Kids About Money (Please Share Yours!)

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Kids and Money

Check out this reader email I recently received…

I want to teach my 5 1/2 year old about money…ideally saving, sharing and spending OR saving, spending, investing and giving method. Do you know of any programs, books or products that people would recommend for this age group?

Kids & Money

Do you have any tips? Please share!

(Thanks, Jessem)

Join The Discussion

Comments 47

  1. Kati

    Dave Ramsey has a kids program that focuses on this subject.

  2. Kate

    I highly recommend the book MoneySmart family system by Steve and Annette Economides. We have been working on it for a few months and my boys are excited not only for “payday” but to do their chores with great attitudes, it has been a huge blessing.

  3. Sarah

    Oh yes! I am a high school financial literacy teacher. Dave Ramsey’s materials are excellent and he has great materials for little ones too!

    • Dani

      I have four kids and the first two took the college prep math that was recommended but my third kid took Financial Lit.

      It changed his life! He sets aside his money into categories. He is 22. Has a Roth and will graduate in a semester debt free from college where the class inspired him to major in business!

      After he was talking to his older siblings about his class we realized that they had no idea about CDs or interest or other things we apparently neglected to realize to teach them.

      Our fourth child is a senior and we would not allow her to take whatever math they recommended but instead she is taking Financial Lit and asking lots of questions.

      I wish I had realized that for my older children. Thank you for the class you teach. More parents need to know about the benefits of this class!

  4. Brenda

    I believe it would help if she knew the value of the coins. I would start with counting pennies and go up from there. Then you could add how much an item costs. And then the value of saving when it is something she wants. She should be expected to earn money for small items and she will know how much work she needs to do to be able to buy it. Growing up my kids had paper routes and had to save all but 10.00 which they could spend as they chose. Doing errands would accomplish the same thing.

  5. CO Mama

    Financial Peace Jr. And Smart Money, Smart Kids, I highly recommend! It is amazing how naturally generous kids are! So important to teach, if we (parents) don’t do it, who will?

  6. Jennifer

    I try to teach my children that change is still money. So we try to pick up any pennies or change we come across put it in a jar so they can see how quickly it can add up turning into dollars. You can even decorate your”found change jar”.It’s kinda of fun to see them get excited about change that they randomly find. Some people throw away change or vacuum it up from their vehicles. My kids would throw a tantrum if I did that, lol!

  7. Kim

    Dave Ramsey has materials for kids; we are still using them and my kids are 8 and 11. GREAT teaching/tool.

  8. Traci Anderson

    We tried allowance with my 5 year old and I don’t think he got it so it fizzled but tried again at 6 and he’s learning a lot. I’m not too big into saving yet, but he gets $5/week in ones and quarters and has to give $0.50 for his tithe and does $0.50 in the coin spinner deal at church for various missions. We expect him to buy any impulse trinkets and any Legos he wants. It’s really helped him learn the cost of Legos- we do pay sales tax for what he saves up for- I can’t figure out explaining sales tax yet. Not doing chores or getting in big trouble is loss of a dollar for that day.

    • Sarah H

      Reminds me of my first purchase with my own money. It was a 45 record. It cost $1 and I was shocked when the clerk told me it was $1.03, including tax. I said, “Who wants tacks with a record?”

      • Amy

        That’s an awesome story. I love it!

      • Norma

        Cute!

    • lori b

      Yes, yes, yes. Please dont tell kids that 2.99 is the same as 3.00. We get to adding or subtracting money in school and they swear they are right because mom told them 2.99 was the same as 3.00. I understand where mom was headed but the kids get very confused.

  9. Mar

    We opened a savings account at the bank over the holidays. My five year old has an online account but I thought physically going to make deposits was valuable too. Citizens bank has the most amazing account for kids. With a $25 a month deposit they will give you 1k on child’s 18th bday. I just open end one for both kids!

  10. Ashley

    We use a chart that allows my daughter to keep what has been earned. I don’t think taking money back is fair on the other hand it must be earned. The tougher the job the more boxes she can check. Not only this but at the top we write a goal. For example an art class is $8 that means she needs 16 boxes. She either reaches her goal or she doesn’t. At that point it can carry over to the next goal or she can cash out and put it I’m the bank.

    • Stephanie

      I agree! They worked hard for that money and just because they had a bad day doesnt mean they should lose it…hell I would be broke if my money was taken away for everytime I didnt accomplish something for the day ๐Ÿ˜‚ once its earned its earned…

  11. Jen M

    There is a board game called Allowance that both my kids LOVED playing. They sell it at Lakeshore. Highly recommend.

  12. Courtney

    My family always had us work for our money, no freebies other than birthdays and Christmas, of course. From there we had to set aside first our tithes, of course, then 50% afterwards had to go into savings for way future planning. And the rest I could spend. It really taught me a lot to have to set aside 1/2 of my money. I was constantly saving but also got to enjoy my money. Nowadays, I am 24, debt free with a BA in process (paid 100% by myself and paid as I study), Ive traveled internationally, have a steady budget I stick to, investments in stocks and Roth IRA, and saving up for my first house. As a nanny, ive had plenty of times to teach financial situations to ‘my kids’ and one of my favorite lessons I can implement without overstepping parental boundaries is saving up for something. Its hard when youre a kid and you go down the toy aisle with absolutely no direction other than the oohs and ahhs of every single toy only to be bummed out that mommy isnt buying it and you definitely cant either. So I give the kids a little direction, we shop for something theyre really interested in or want, snap a picture and write down the price. From there we retain the memory of said item and save up for it, only to soon go buy it all by themselves.

    • jessem

      Wow….awesome. Good for you.

  13. shireen

    pinterest it..they have some great ideas!

  14. MommySpendsLess

    At Christmas my daughter’s school had a “Penguin Shop” where the children could bring in money to buy small presents for their family members. I decided to let her get gifts for grandparents, aunts/uncles and cousins too – a total of about 18 people. Together we made a simple Excel spreadsheet that included a list of everyone she wanted to get a present for and I gave her a budget of $20. I set up a couple basic formulas so she could instantly see the results as we talked through how much to spend on each person.

    Afterwards I explained that Mommy and Daddy have a budget too and I showed her the spreadsheet I keep on a weekly basis and in a similar fashion I showed her what would happen if we spent a bunch of money on fun stuff (there’d be little to no money left for things we need).

    Christmas is pretty far off but maybe she could help budget for something else (a day at the zoo, a birthday party, etc.)

  15. luckymeyay

    http://www.smckids.com

    Check out Warren Buffet’s secret millionaire’s club for kids. Your child may be too young, but keep it in mind for future reference.

  16. A

    I unfortunately grew up in a family where (more than once) my birthday money or money I earned was “borrowed” and never repaid by broke parents or stolen by dishonest relatives. All that taught me was to hurry up and spend every dollar that came my way before someone else could take it away. It was so hard to develop a healthy and frugal financial life with a start like that. Teaching finance from the beginning is so crucial. Love all these clever ideas!

    • Kaiyla

      ๐Ÿ™ ugh! So sad, I’m sorry that happened to you. What a horrible thing to do to a child or anyone.

  17. Laressa Nordgren

    For our kiddos fifth birthday one of their gifts is the Larry Burkett bank. It has three separate spots for store, bank and church. Whenever we give our kids money they always like to divide it up and put it in the bank. Usually at younger ages they put an equal amount in each bank but as they have gotten older sometimes they put more in store but we tell them they need to put at least 10% in church and bank.

  18. Pat

    My grandkids love going to thrift stores and I have taught them the value of using coupons. It is harder to get them to save money though. My granddaughter will come over and start cleaning house and if I ask her why she usually says that my brother is going to a few flea markets and she needs money. LOL 10 and already knows how to work to get paid. She does surveys and I make her keep that money in her bank account. I am going to try and teach her to put a percentage of her money in savings as she gets older.

  19. lop

    I’m a big fan of Dave Ramsey. We skip over any religious parts, but do encourage (not require) the donation- which they usually save up for toys for the needy at Christmas.

  20. raychaelrenee

    I’m an independent consultant for Usborne/Kane Miller books and we have a really adorable book that explains what happens when toys are sold for pocket money. It’s for ages 5-7. Let me know if you’re interested and I can send you an email. ๐Ÿ™‚

  21. singlemommoneycoach

    I’m a big fan of the Three Jars online program. It’s set up so kids can earn money through chores, small tasks, etc and then they can decide to spend, save or share their earnings. Parents can also withdraw money from the accounts. Personally I have taught my children how to coupon and comparison shop. It’s actually quite funny because if my grocery bill runs higher than $50 my son knows mommy didn’t plan her trip. My 9 year old and 10 year old actually use the internet to compare prices for items on their Christmas list. I love it because not only are they learning something, but it saves me time because they are usually right.

  22. Katie

    My 6 year has saved every penny she has recieved. We talk to her about much things cost when she is around (also about electric, how much the house cost, etc.) As much as we can. She knows that going out to eat will cause her to lose money or she can eat cheaper at home. Just talking to them helps!

  23. David and Victoria

    Check out Faith & Finances for kids. It teaches kids 3 and up how to manage an income, as well as six stewardship principles. There are 4 banks: giving, saving, reserves (short term saving – like an emergency fund), and savings (long term savings like retirement). It also incorporates paying taxes (income tax and property tax) since they will have to do that as adults. It’s awesome!!! http://www.faithandfinancesforkids.com

  24. lori b

    Some other ideas: have your child count the coins out for the change part of your order in the drive through, let them run a lemonade stand or garage sale, games like payday and monopoly are great. Many, many kids have never played Monopoly, can you believe it? I would also say to please make an effort to pay in cash at least occasionally. Lots of kids don’t know how much the coins are worth or how to add coins or figure out how much change they should have, or even realize you still pay for things on the card. My absolute favorite thing we did with our kids was on vacation we gave them all their spending money for souvenirs at the beginning of vacation. They could spend it like they wanted but when it was gone it was gone. No whining and no asking for anything. Taught them pretty fast to budget for places we hadn’t been to yet. Suddenly that clearance rack was mighty enticing.

  25. Kelly

    You saw the jars in the photo, I recommend 4 jars, not 3. Save, Spend, Give and Grow. My child splits any money he gets 4 ways.
    Save: For a larger purchase later
    Spend: For today. Usually Dollar Tree, because of course it’s never much.
    Give: Church in our case, or a favorite charity. Like an animal shelter or a charity that trains guide dogs, for example
    Grow: To be invested. We match dollar for dollar everything that goes into the Grow jar. This gives them incentive because they actually see it grow. Then we invest it in the stock market and go over it through stories. This will also prepare your child when they eventually grow up; because it’s kinda like your 401k.
    As for the stock market (I’m a financial advisor so a big fan) I also bought my boys a stock to watch. In our case, it was 10 shares of a Railroad stock because they love trains (and who am I to fight the most American industry ever). I printed out a picture of an engine from the train company that they colored in. I wrote down the initial number of shares, cost per share, and cost for the entire purchase. I also drew coal cars and put the years on them (one for 2015, 2016, 2017 etc.) The company pays a dividend every quarter. So each time a dividend is paid, I write that amount (say $5.24) and the number of shares they now possess (since it reinvests) onto a piece of “coal”, which is a piece of paper cut into a rock shape. Then we put the “coal” into the cart (by basically taping it on the wall). So each quarter it becomes another talking point and they learn how money is made. That way, you’ll end up with 4 pieces of coal a year, and they look forward to it. Their first foray into passive income. Good luck!

    • jessem

      Kelly thank you. I absolutely agree with the 4 jars….and love the idea of buying a stock…we are also big fans of the stock market. Invest is such a hard concept for kids but crucial.

  26. Michelle W

    An example I always remember as a kid is my parents cashed my dad’s paycheck all in $1 bills. I though we were rich seeing all that money. Then they paid off all our expenses from mortgage, electricity etc. with the cash. I saw the pile of money get smaller and smaller. They put some in savings and talked about how important that it was that you should always pay yourself and God before spending on unneeded items like trendy clothes etc. This has always stuck with me and I am a very good saver ๐Ÿ˜€

  27. Nancy

    The Federal Reserve Bank offers free workbooks for early grades (grades1-3) that introduce the concepts of making decisions and choices involving money, recognizing and counting currency and larger concepts such as opportunity cost. The workbook is terrific but will need adult intervention. It is a great pace for kids and fun! I used it with great success for 7 year olds.

  28. Mike cappillo

    OK so here is what I do with my children, every time we go to a store I pay cash first I let them pay next they get to keep the change if they can tell me what the change is before the cashier does. We were in dairy Queen the gentleman in front of us paid with a $20 bill on a $10.24 order. The 16 year old behind the register started with the change she grabbed 2 quarters and started counting out dimes. My 8 year old says your supposed to give him 3 quarters 1 penny a $5 bill and 4 $1 bills. The girl was embarrassed but I was a proud father. Both my 8 year old son and my 10 year old daughter can usually beat the register when it comes to making change. The next tip is to have them set a goal of how much money they need to raise for a specific item. Including discounts and percentage sales. Let them count their money on Friday to see if they can go shopping Saturday. They also have to check for coupons and sales and figure in tax before they can go. Plus they have to have enough money for the item.

  29. Michael CAPPILLO

    We also have to make sure that we take minimum of 10% of what we save and donate it to make a wish and give kids the world. Since m uh daughter is a make a wish kid she want to make sure that others can have their wishes come true. And finally it is up to them how much money or percentage of money they put into their 529 for college they get a matching $1 for every one they save. Children will believe in themselves if you believe in them. And they will reach any marker set for them if you believe and talk to them with honestly.

  30. thehenrydthoreau

    My son is 12. I’ve always made sure to role model spendthrift behavior. He has watched me pay from .00-.97 for shirts from Sears and Old Navy. Six dollars total for five pairs of shoes and four pairs of boots. He has seen me pick up free make up, free packs of underwear and free socks or purchase brand new in package items for .25 to 1.00 at garage sales. He has seen me purchase things at 90% off, resold near retail and pay for my classes at a Swedish and Harvard University. He has also witnessed me resell at near retail and pay 40% off face value of strong foreign currency. He sees that quality has value. I purchased a Crane humidifier for $10.15 and resold it for $10 three years later. My 10 year old refurb Dyson is still going strong.

    Ive taught him donating is important. I can do so much more knowing how to shop than blindly donating money. I just donated $1542.00 worth of Old Navy clothes for $97 out of pocket He also sees me use cash only. Lastly, as my screen name suggests, i am a minimalist. I’ve taught him less is more.

    We can give our kids books but ultimately, the learn by watching us.

  31. Kerryiu

    Although i dont have kids personally but i’ve followed Dave Ramsey’s philosophy about giving, saving, & spending. It helped me become debt free within 2 years & now i teach my students (1st-high school) the same concept & it works-minus the religious aspect). I recommend Financial Peace, Jr. & Smart Money, Smart Kids.

  32. Lt

    At 2 yrs old I already taught my kid to “feed the pink piggy” meaning to put coins/change on the piggy bank because it’s hungry, lol. And everytime I have a bill on hand she knew somewhere a coins will come out of the register. She took those coins out of my hand and roll it to the big donation jar at Walmart but I always told her only the pennies because the piggy bank are waiting at home. Teach her that when the piggy I full that we will take them out and give have of it to the savings and half of it for her… In Stores like Walmart my kid always want to go to the toy isle… But I told her that we can only “borrow” it coz we can’t buy it, no budget and promised her that we will buy toys at yard sales. Goodness! She remembers my promised to her that we will buy toys at yard sale at 3 yrs old but at least she will noticed that I only paid coins than a full paper bill… And that if I don’t have a money to pay then no more budget… I am an Asian country name Philippines and that the poverty and hardship makes us value the money. Because we are not fortunate to have credit cards before it teaches us to save so we can have something for tomorrow…

  33. Sarah

    This isn’t really for young kids but when I was about 13 or 14 my parents went through a rough spell and couldn’t afford to hand me clothes all the time and me being a teenager wanted to dress nice so she would give me the money myself and tell me this is what u have for clothes for the next 6 months and leave it in my hands I soon found out how to shop for bargains and hit the clearance racks and when she had a coupon for like 10 off 10 at jcp she would always give it to me and I learned how valuable thing like that were so now that I’m married I still know how to shop and stretch our money thinks to my mom doing that when I was younger and of course she always made sure I had what I needed but I’m very thankful I went into marriage knowing how to spend money wisely

    • Sarah

      Also a few years later my mom staring giving me an allowance and I was responsible for paying my cell phone bill and the money left over was for going out with friends it helped me learn to watch for specials and ways to have fun and hang out with my friends for cheap or free then after I graduated she gave me certain amount to spend on a car and after that the rest was up to me to pay I got a job and learned to send out my check monthly and make sure it was on time all of this helped so much when I got married I was very glad that I knew how to manage money and that everything wasn’t given to me def made me appreciate when my mom would splurge and buy me things I realized how much it was really worth

  34. Terry

    I am a single mom with two children and I was on Welfare when they were young. But we started with the idea of actively working to “Save”, for example, when we learned to always turn off the lights and not leave the water running, I put money in their banks that they could spend since they worked on saving. But it wasn’t long before I informed them both that they were welcome to get a car when they turned 16 – but they had to pay for it & insurance themselves. So they started working to save – paper routes & babysitting. Each was able to purchase used vehicles when they turned 16. Now they are in their 30’s and both are still excellent at saving for their retirement.

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