5-year olds and money

A few months ago, my son asked me, “How can I get more dollars?” He later had an epiphany: “If I save my coins, I can make more dollars!” He is starting to understand that everything cost dollars.

Let’s take a moment out of our holiday shopping to think about what we are teaching our children about money. Sometimes we get caught up in all the “stuff” – the gadgets, the sales, and blowout deals. But remember: children watch us all the time and this is the example we’re setting for them.

Here’s what we’re teaching our five year-old son about money:

* An allowance? Not just yet! I don’t want to give my son money for doing things he should already do, like homework, cleaning up his toys, and helping with laundry. I tell him that we’re a family and we don’t need dollars to help each other. But we “pay” him $1 for helping us sort bottles and cans at the recycling truck.

* Spend it, save it, share it. If my son receives money at birthdays and holidays, I ask him to set some money aside to put in his savings account. As he gets older, I’ll ask him to set aside some money to give to a charity.

* Open a keiki savings account. Some parents open a savings account for their children as soon as they are born, but I wanted my son to go into a bank and open an account for himself. An online bank may offer a better interest rate, but kids can’t walk up to a teller and deposit or withdraw money.

* Say “yes!” to a kids-only swap meet. This year, we had a wonderful experience with a Keiki Swap Meet organized by the Children’s Discovery Center in Honolulu. I helped my son sort and price the toys he was willing to sell, and he made store signs. On the day of the swap meet, he did it all – greeted customers, suggested toys, took their money, gave them change, and said thank you.

* Don’t ask for presents! I remind my son that he can only ask mom and dad for presents. He can ask Santa for a present too, but Santa can only hear him when he’s a good boy. I also ask relatives to give him fewer toys (books are welcome!).

Do you teach your children about finances? How important is money to them? When should kids receive an allowance, and how much should it be? Let me know what you think.

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