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We’d like to turn the tables with this article and ask for your advice as we embark on a new part of our lives as parents. Our oldest daughter is coming up on her 6th birthday, and we believe it is time to really start making her aware of the concept of money.
Our question to you is: What do you think is the best way to introduce money to young children? What strategies are you using (or did you use) with your children that you think work well? What isn’t working out as well as you hoped?
Setting a Good Example
We’ve tried to set a good example for our children by creating an environment where we don’t covet material objects, fancy new cars or houses and instead focus on spending time together as a family. But other than the occasional talk about how much something costs, or whether we should or could buy something, we haven’t had an overt talk about money.
How We Give Allowance
Now that our oldest is turning six, we thought one way we could introduce money was to give her a small allowance each week. However, instead of just giving her this money with no stipulations on how it is spent, we decided to do the following with the $4 we’re giving her each week:
- $2 each week is put aside for long-term savings. Every four weeks we’ll take her accumulated $8 and drive together to the bank to deposit the money. This will enable her to see her balance start from $0 and grow over the course of time. Eventually we will introduce her to the concept of investing, interest and compounding, but that can wait for another day.
- $1 each week is put towards charity. She has previously shown a real concern for helping others and this will enable her to donate to a cause she selects. We plan to become involved with the local food bank so she can see more personally how her donation of money and time can positively impact other people.
- $1 each week is for spending. Each month she’ll have the option to go to the store and pick out a few small items (coloring books, markers, etc.), or she can continue to accumulate this money to save towards a larger item.
We’d love to hear what you think about our system and please let us know what strategies work(ed) well for you with your children!