Teaching About Money

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At what age is it appropriate to start teaching a child that things cost money? How can we teach our children responsibility and at the same time prevent them from becoming materialistic?

Often the first step parents take in teaching children about money is to set a monthly allowance. You can set it as soon as younger children start asking for things at the store.

How to start:

• Decide the amount of the monthly allowance; it must be something small.

• Make sure your child has a piggy bank or other place to store their money safely.

• Start talking to your child about the differences between needs and wants. He needs shoes, but he wants a new toy.

• Let your child occasionally take money from the piggy bank to buy gum or a toy when shopping. Take time to show him what will happen: you will give the seller the money and he will give you the gum. He keeps the money and you get the gum.

As your child grows, the allowance can increase. Negotiate with your child. How will they earn the money and why do they need a raise?

Some parents link the monthly allowance to daily tasks. For example, if children complete all their weekly responsibilities, they will earn their money. Other families feel that responsibilities are to meet the family's needs and prefer to use the allowance only as a teaching tool.

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Here are some important steps to remember when teaching your child about money:

• Make sure what you ask of your child is age appropriate. You cannot expect a very young child to save for several months for a toy because he cannot understand events so far in the future.

• Make clear your child's expectations for how he is expected to use his money. Are they allowed to do whatever they want with the money, give it to church or charity, use it for special events?

• Remind children of their goals and responsibilities with money. Learning about money takes time, so be patient.

• You can talk about the concept of bills and monthly shopping lists but you don't talk about adult money issues.

If we start teaching our children about money as early as possible, our children will be on their way to a healthy relationship with money in the future.