Best age/way to start teaching children about money

So my son just turned 4 and I'm wondering when is the best age/way to start teaching him about money. There seem to be so many websites out there, I was wondering if anyone had any favorites. He has a piggy bank that he'll put loose change into and I try to get him to put some of his money into another piggy bank that we tell him is for "poorer" people, but that's about the extent of the money lessons I've given him so far.

$5 weekly allowance. He'll learn how to save up money to buy big ticket items and how to find the best value for the buck.

Is 4 yrs old too young to start? (although I guess you can say its never too young to start) And by paying your kids to do the chores around the house that they should already be doing (i.e. cleaning their room, putting their toys away, etc.), aren't you teaching them to only help around the house when they get paid?

reiffe said: Is 4 yrs old too young to start? (although I guess you can say its never too young to start) And by paying your kids to do the chores around the house that they should already be doing (i.e. cleaning their room, putting their toys away, etc.), aren't you teaching them to only help around the house when they get paid?

Allowances are awful. You are right, paying kids to something they should already be doing is not teaching them the right lesson. So when they're in college they're going to be slobs because no one is paying them to clean up?

reiffe said: Obama4Prez said: reiffe said: Is 4 yrs old too young to start? (although I guess you can say its never too young to start) And by paying your kids to do the chores around the house that they should already be doing (i.e. cleaning their room, putting their toys away, etc.), aren't you teaching them to only help around the house when they get paid?

Allowances are awful. You are right, paying kids to something they should already be doing is not teaching them the right lesson. So when they're in college they're going to be slobs because no one is paying them to clean up?

That's part of my worry. I don't want my kid to grow up being a spoiled brat and telling me he's not cleaning up his room unless I pay him. There's got to be some happy medium where I can let my child earn money while at the same time teach him about saving, donating, budgeting, etc.

I don't have kids and did not grow up receiving any allowance (came out quite frugal!).

Maybe you can involve him very basically in the food budget? Maybe he has a favorite food but it has to fit in the budget and other items are more important (milk, etc). 4 years might be too young in any case, unless he's already really good with math and numbers.

reiffe said: I guess that's what I was trying to figure out with this thread...is 4 yrs old just too young to start with this?

Probably.

MadAnthony said: Obama4Prez said:

I don't have kids and did not grow up receiving any allowance (came out quite frugal!).

Same here. On the other hand, my older brother, who obviously was raised under the same circumstances as me, is considerably less frugal. I suspect frugality may not be as much of a nurture issue as we'd like to think.

Passbook savings accounts used to be a good way to show the power of compound interest, but with interest rates what they are, they are more a lesson about monetary policy that I suspect would be lost a 4 year old.

I received a generous allowance when I was a kid and I'm quite frugal. But I didn't really become frugal until I got my first job and was making only $30k a year. Then I read about investing, saving, etc and went down that path.

I have a son, and we are divorced. In his dads house he gets paid to do chores. When he comes here, he has to do them and I do not pay him. I get a lot of whining out of him for that, but I stick with it.

At his dads house he has to put every penny he earns for his chores into a bank account.He is not allowed to use that money at all, for anything, and he only gets toys and such on birthdays and Christmas.

At my house if he wants something, the rule is he must plan for it, by asking me in advance, while we are not in a store and there are no commercials on, for the item he wants. If he asks in a store, or after he sees a commercial, the answer is no. The other rule, is if he wants something, and he has asked for it in advance, he has to wait until we find it for a good price, on clearance or a good sale, and then we will buy it.
He is one of the only kids I know who runs through the toy section of Target looking to see if any of the things he wants has gone on clearance, and he is one of the only ones who will not ask me for anything in a store unless he has met the criteria...
I started when he was four by showing him the clearance tags on the toys at Target and telling him he could only get toys that had more than one tag...

I plan to start giving him an allowance when he is ten, and plan to start teaching him to use the skills he already knows with money he has. His dad plans to give him all his chore money when he goes to college. Hopefully between the two households and different ways of doing things he will end up with a good financial base to start from...

Indulge and spoil your child because you love him so much. Don't ever expect him to get a job in his teens, and be prepared to pay for his entire college education and grad school, as he will not lift a finger until he actually has to... meaning, when he's in his late 20s and needs money to impress girls. Hope that he moves out of your house by age 30.

Start teaching him Business - Small trades, how to make margin etc...

jordge said: I guess I grew up in a different time. There were chores to do and a whippin if they weren't done right. There was also allowance which I later figured out was to get us kids out of the house each Saturday. That was back in the day where a couple bucks and a walk got you to a movie and snacks. I learned quickly how to save a little and loan money to my brother. I guess he was a slower learner cuz he paid me a quarter a week interest on a quarter loan for quite a while. So, does an allownace help you learn how to take care of money? It did for me but not so much for my brother.
Damn, my brother just never paid me back

How did you enforce this interest and re-payment? Was he younger?

I'd say 5-6 is a good time to start. Another good way is to take them to the grocery and show them what each thing costs, that way they know which things are luxuries vs Staples. This is similar to showing kids where food comes from (piggy, cow, chicken, plants). Then you can say how long you had to work in order to buy all that food.

My Dad gave me an allowance, but he gave me more if I did certain chores. I always felt guilty when he gave me my allowance, it is always more fulfilling to earn your money rather than getting handouts.

1/2 way through college

ASAP so he doesn't spend your money partying at a top 5 state university when he's 20.

bigdinkel said: ASAP so he doesn't spend your money partying at a top 5 state university when he's 20.

So he doesn't get kicked out and spend the tuition money on booze and H&B

Glitch99 said:
You dont present the allowance as compensation for doing his chores. You use it as a substitute for things he wants that you would've paid for anyways.

This way you're not teaching him to only do things when he's getting paid, your teaching him how to prioritize and allocate his limited discretionary "income" amongst his many impulses and "wants". And as he gets older, you can raise the allowance in return for him taking responsibility for some of his "needs" as well.

That is exactly how we did allowances starting at age 10. Before that it was just piggy bank for saving + spending some money on whatever "wants".

At the begining it was just $5 per week but at the same time we shifted all buying responsibilities for basic school supplies, all toys, some books and movies with friends. We have been increasing amount every year but with shifting more responsibilities at the same time. At age 14 we were giving $20 per week but stoped paying for anything except for food and shelter. All movies, gifts to friends, clothing, shoes, cosmetics had to be paid from that money.

To make it more interesting we included dog into the mix when we bought it (child also got a raise from $20 to $25) - now it became a little family where child is an earner and dog is a dependent Then she was in charge of paying not only for herself but also for the regular dog's needs - she loved it(being in charge)!!!

At age 15 child got a job and today 3 years later she is still paying for herself and dog but out of earned money, all allowances (still $25 per week) are going into ING saving account (her choice).

To reward (and keep it even more intersting) all money that she earns are getting matched 100% but in Roth IRA. First 2 years there was no interest from her, now for some reason she is proud of having that account and paying more attention to what is going on there.
So far seems it was working well, chores are not paid in our house.

MoneyOCD said:
To reward (and keep it even more intersting) all money that she earns are getting matched 100% but in Roth IRA. First 2 years there was no interest from her, now for some reason she is proud of having that account and paying more attention to what is going on there.
So far seems it was working well, chores are not paid in our house.

Am I correct in thinking that a child can only contribute to an IRA an amount equal to or less than what they made in a given year? I'm not saying you would have an issue there -- your child is probably putting less into the IRA than he/she is making -- I'm just trying to understand for my own future reference.

lilslyk said: MoneyOCD said:
To reward (and keep it even more intersting) all money that she earns are getting matched 100% but in Roth IRA. First 2 years there was no interest from her, now for some reason she is proud of having that account and paying more attention to what is going on there.
So far seems it was working well, chores are not paid in our house.

Am I correct in thinking that a child can only contribute to an IRA an amount equal to or less than what they made in a given year? I'm not saying you would have an issue there -- your child is probably putting less into the IRA than he/she is making -- I'm just trying to understand for my own future reference.

1.Correct, we are putting only amount that she earns at real job, it does not include allowances.
2.Child keeps the money, we ,parents, put equal amount to Roth IRA. There is no limitiation on who would put money into IRA as long as amount does not exceed annual limit or total earned income whichever is less.

Thinking back to how I learned about money from parent:

1. Never let them buy wastefull crap, and make it a point that its wasteful. Biggest example I can remeber when very young in concessions at a movie theater and at the amusement park. There was no "but I want" because I knew there was absolutely no chance I was going to get. Also I heard regularly how stupid anyone was that would pay $5 for a small bag of popcorn.

2. Whenever we went out to dinners I was always give a budget. I could get whatever I wanted on the menu as long as it was less than some amount (say $5). I rember it was always a little less than everything I wanted, so I could get a burger and french fries, but then only water, or I could get a burger and a coke, but would have to skip the fries. You get the picture.

3. I never got an alowance and I wasn't allowed to have a job ("going to school is your job"). I was given what I needed and typically nothing more (except christmas and bithday). I remeber deperately wanting some stupid designer sneakers. I think I heard about how idiotic thoise were for like a month pretty much every day. "can you imagine, who would be stupid enough to pay that much for a pair of sneakers. Your freinds parents must be crazy. etc...".

4. I remeber at ~age 9 wanting a new computer. My father and I had a very rational discussion about it. I aksed why he was allowed to buy all kinds of computer "toys" but I couldn't have any new ones. He explained that while they played games (not as well as the one I wanted like my friends had) they were also used for work and he made more money from having them and that the extra money he made from using them more than paid for the cost to buy them. I still remember that lesson.

The best lesson I learnt in money was when I ordered a stuffed polar bear I could not afford from the sports teams fundraiser cataloge assuming I would have the money for it in 8 long weeks when it came in. I was short less then $3 when the time came to pay. My parents could have easy paid the extra $2.83 but they did not. Instead I spent the entire weekend doing things like cutting the weeds around the pine trees for 5 cents a tree and cleaning out the neighbors garage for $1. I spent all weekend working for that money. As a result I have a strong dislike of the idea of buying things with money I do not have in hand. Not to mention by the time I got the stupid stuffed polar bear I did not even want it. Some people go several K in credit card debt to learn this lesson that cost me a weekend and under $3

uutxs said: GreyRabbit said: My friend has an interesting system, for his child in elementary school. For each point above a 90 that he scores on a test, he gets a dollar (97 gives him $70) for each point below, he pays a dollar.
Maybe your friend needs a math lesson first.

Good catch! Thats not my friend, but I who made the mistype. 97 only gives him $7.

fridaynight said: Do you plan to give him $5 a week "just because" so he can save up for a $20 toy after a month? That's ridiculous.

While I really like the ideas in the rest of your post, I'm not sure I understand this... Are you saying it's ridiculous for a child to have to save up to buy a toy? How is that ridiculous... that seems like a great idea...