Our Mommyhood

As a mom to toddlers, I questioned when I should begin to teach my children financial responsibility. Should I start now? Should I wait until they were teenagers? Would my toddlers even understand the concept of money? After doing a bit of research, I decided that now was as good a time as any to start teaching my kids the value of a dollar.

If you have been wondering the same thing, here is a bit of what I learned through books and websites; hopefully it will help you as much as it did me!

Start Young
Children as young as four can be taught lessons about money; the key is to start simply. Begin by setting up a piggy bank in your child’s room and teaching them the value of coins and paper money. The lessons, again, should be simple. Teach them to identify a penny, nickel, dime, quarter and dollar bill. They don’t necessarily need to know that a quarter is $0.25 but that the specific coin is called a “quarter”.

Here’s an easy lesson: empty your pocket at the end of the day and help your child identify five coins. Once they’ve identified the coins, let them put them in their piggy bank. Allowing your children to keep the five coins makes them eager to practice their identification and doesn’t cost you much.

Allowance
When your child is old enough to understand “allowance”, give them one. The age will vary depending on the mental maturity of the child. Because my children are doing well with their identification, I plan to start allowance once they’ve entered kindergarten.

The key to an allowance is in teaching your children that they earn money for going above and beyond. Making their bed, for instance, does not earn an allowance as it is a necessary task. Helping empty the dishwasher or volunteering to take out the garbage, or collect the recyclables, on the other hand, does earn an allowance. Children need to learn that there are some things in life that are expected and won’t earn them a reward; monetary or otherwise.

Saving
When you begin to give your children an allowance, it’s a great time to teach them about saving their money. Teach your children the rule of three: one third is saved, one third is shared and one third is spent. Obviously, if you’re only giving your child $1 or two a week, you aren’t going to send $0.33 or $0.63 to a charity but you can put this money in a separate bank and send it along when your child has saved $10.

Teaching your child that not all money earned is money to spend will pave the way to financial responsibility in adulthood. Many parents make the critical mistake of letting their children spend all of their allowance. Doing so doesn’t teach them a thing about responsibility which is your ultimate goal.

Teaching your children how to be responsible with their money is one of the most important lessons that you can offer. Children who learn how to manage money properly grow into adults who are fiscally responsible. It’s never too early to begin teaching your child the value of saving; just make sure your lessons are age-appropriate.

Author Jessica Stevens is a financial consultant and content contributor for wisebread.com, a site offering reviews on some of the best balance transfer credit cards and great money tips for living large on a small budget.

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