How young should you start teaching them? As soon as they can talk to you, why not? By 3, my son Jacob knew what he wanted from the store alright. So, I started teaching him about money by giving him a dollar to pay the cashier when I bought things. Early on you’ve got to nip the impulsive “buying what your kids want while in line.” It’ll save you a ton of hassle and money in the future. I like to postpone rewards. “We’ll, we can’t get it right now, but maybe we can next time.” Try and create healthy snacks that excite. Like, blueberries are so yummy, we should get some for a snack. It’s hard at first, but eventually they don’t even think about the junk food. They will truly enjoy the healthier food more. Just take the time to prepare before you go in the store.
Back to my point, start them thinking as early as possible. Some kids are really bright, girls (I’ll admit it) seem to be brighter from my experience earlier on. My son’s friend Peyton was having pretty lengthy conversations when she was no more than 2 and a half, and my daughter Hannah has been speaking sentences and she hasn’t turned two yet (Jake and Kyle we’re almost a year later – we’re waiting on the results for Max).
Even if they don’t comprehend, you have them thinking. By the time they’re aloud to earn allowance, I started Kyle at about 7.5, you can then help them understand the concept of work and paying for things (they should have heard it many times by this age – but they start to really grasp it then). My advice, tell them you’re paying them for helping do what they have to help the family. Also, equally important is to start them saving and investing! Teach them about earning money with money – and how you can continue to make money off of money you save and invest. Teach them about the reasons why people live in different houses and how they can choose where they want to live (to a certain extent) if they learn how to save and invest properly. My recommendation for a 7 or 8 year old is to pay them $7 or $8 ($7 for a 7 year old, $8 for an $8) per week. Lay out the cash in one’s if possible, give them $5 and start them a savings account with the $2 or $3 per week (obviously you may have to set aside a minimum deposit for a bank like $50 or $100). Keep the rule at a minimum of 20% goes towards savings. Every year up the ante $1 per year. Teach them that not only they are helping you and the family, but they’re earning money too. After you’ve accumulated the initial deposit, start them an investment account. I’ve reviewed numerous brokers that you can start them an custodial investment account with and with no minimum investment.
IT doesn’t stop there, you must take the time to teach your kids about frugal spending. I will be posting more articles on this topic, my next in this series will be called, “But it’s only a dollar dad.”