When my toddler asked for blueberries and I told her we were out, she said, “Let’s go to the store and get some more.” While I can afford blueberries and her request was not grand, it occurred to me that she had no idea one must fork over money for things in stores. She knows her parents “go to work,” but she doesn’t understand that we do so to earn money for blueberries.
As I pondered when and how to begin teaching lessons about money (I can almost hear her in a few years suggesting we go to the store to get the latest iPod or designer jeans), I decided to ask advice from the leading expert in this arena, Neale Godfrey, who has written sixteen books dealing with money, life skills, and values. Her books include Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children, which was number one on the New York Times best-seller list.
She generously agreed to chat with me about this topic, and here are excerpts from our conversation:
Q: How early can you start teaching kids about money?
A: Age three. That is when they start the “I want, I want, I want.”
Q: Can you offer some tips for teaching young children about money?
A: Kids should get an allowance. They must do chores. There is no entitlement. There are two kinds of chores, work-for-pay and citizen-of-the-household. Citizen-of-the-household chores are things like brushing teeth. Work-for-pay can be something like setting the table. You set up a job chart and check off every job that they complete. You celebrate their successes.
Q: Once they have the money, do you help them manage it?
A: You do a budget. Budgeting is a life skill. You get four clear plastic jars or four clear plastic pouches. The first jar is for charity. You take ten percent right off the top for charity. When kids are little, you pick the charity and as they get older, it can be something that they are interested in. The remaining 90 percent is divided into thirds. The first third is quick cash. It is instant gratification. They’ve worked hard and they can buy something they want. You set the ground rules: no chocolate, no candy, no automatic weapons, whatever. Then they can choose. The second third is medium-term savings. You are teaching them to push off instant gratification and save for something bigger that they want. The last jar is long-term savings, for college or their future.
Q: Do you think a child as young as three understands the budget?
A: No, but it doesn’t matter. You are teaching them a habit. Three-year-olds don’t understand oral hygiene. It doesn’t matter. You still teach them to brush their teeth.
Q: How do you figure out how much allowance a kid should get?
A: I pay them their age per week.
Q: Any other advice on teaching little ones about money?
A: Talk to kids about money. Make the world your classroom. Talk to them about how much things cost at the grocery store.
Q. That’s interesting. When I was growing up, we never talked about money in my family. I had no idea how much money my parents had.
A: For many of us growing up, it was always the biggest secret. Money is something we should be talking to our kids about.
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