Teaching Kids About Money: The Early Years {Series}

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dollarIn my last post I shared the first thing we can teach our kiddos about money: where it comes from. Once you have established the truth that money comes from work you can start the process of teaching where money goes. And speaking of that…where did it all go? It seems that most adults I know can’t answer this question about their money (call the Federal Reserve – we’ve figured out the national debt crisis!).

When you are little – and for the most part, when you are big – money goes out in three buckets: spend, save, and give. In our house we say that it’s money we “spend now”, money we “save for later”, or money we “give away”. We enforce these concepts by physically helping our kids sort money into those three buckets. We use glass jars with coin-slot lids that I found here. When our kiddos receive money, either by working or as a gift, it goes into their jars.  We use clear jars with our kiddos because:


Kids Money JarsThey can see their money.
Physically, they can see and celebrate the jar filling up – they can literally watch their money grow.

They take responsibility, since it’s theirs. For example, when we are at the store and my kiddo asks for a toy I can say “If you’d really like that we can talk about using some of your spend money to buy it”. It’s their money, and they can choose how to spend it, so you get to lay the foundation for important conversations instead of just saying “no” all the time. You would not believe how this calms what used to be a combustible situation (and how much junk we don’t end up bringing home).

They get to practice generosity. Kids are so much less selfish than we are! This Christmas we suggested a few ways for our three-year-old to use some of his “give” money and it was awesome to see him use it for someone else.

For us, the jars are the way to get started, but it’s what you do once they have money in them that’s the tough part. Here are a few thoughts on spending, saving, and giving and how we transfer those lessons to our kiddos.

Spend: If you are not budgeting as a family, please start. Please, pretty please, start keeping track of where your money goes – you work too hard for it not to know! Kids have to understand that money is a limited resource and that you can’t spend what you don’t have (despite what credit companies and loan officers may tell you).  Here are a few things we do to include our kids in the spending process:

Let them push the buttons. Let them know that you have $100 to spend at the grocery and keep track as you go. Small kiddos that can use a calculator will love to be engaged in this way!

Think out loud. Even tiny kiddos can learn simply by watching you keep track and hearing you say things like “we’ll need to get that next time because we didn’t plan for it today” or “let’s check our budget and see if we have enough”. This includes giving context when you say no, so start explaining yourself with phrases like “we can’t afford that” or “we use our dollars for things that are more useful than that”.

Think about small ways that will work for your kiddos based on their age, but the important thing is to include them in the budgeting and spending so that they see these two important things: money is limited and we don’t spend more than we have. (Personal success tip: we don’t let our littles pay for things unless it’s their money. They don’t swipe cards or give cash unless it’s theirs. It’s our best effort at reinforcing that money comes from work and that if they didn’t earn it it’s not theirs to spend).

Save: If you are not saving as a family, please start. Being willing to live with some margin (meaning spending less than you make) will give you a peace of mind like you wouldn’t believe. And I’m not just talking about retirement; I’m talking about saving up for future expenses (things like brakes, furnace repairs, school clothes, etc.). Here are a few things we do to include our kids in the saving process:

Save things that aren’t money. Instead of eating all three cookies, talk about “saving one for later” instead of eating them all right away. My husband often asks the question “would you like all of these now or would you like some now and later?”.

Make it visual. Next time your kiddo asks for something that you weren’t planning on buying them talk about saving up for it, using money they work for and money that’s gifted to them to reach the goal you set on a chart or somewhere they can see it. If your kids are littler, the save jar is the perfect set-up for this because you can use the “full jar” visual.

Plan for the unexpected. Having an emergency fund for your family is a great way to teach the value of saving.  A few months ago we had three major unexpected expenses in a 24 hour period and despite being unhappy about having to spend the money, we were so glad we had money saved up for “just in case” and we explained that to our kiddos. Our three year old could see that we were upset about the inconvenience, but it was great to explain to him that we had money in our “save jar” for things like this, so we didn’t need to worry.

Choose your own small ways to teach saving to your kiddos, and remember that the important thing is for them to know that you spend less than you make.

Give: If you are not giving as a family, please start. Giving changes who you are. It teaches your kids that you care about more than yourselves, and that you acknowledge the needs of others.

Give more than money. Instead of just getting rid of used toys, let your kids pick one of their new, unopened Christmas gifts to give to a child in foster care or in a hospital. Think about engaging your kids in serving others with your time by sorting clothes at a local shelter or visiting the elderly in a retirement community. Money is an important thing to give, but giving money alone won’t build generosity in the heart of your littles like giving of their time and their stuff.

Give to people and places you can engage with regularly. Choose one or two places/people to really engage with. Take a few dollars from the give jar every week or every month and give consistently. Find a local shelter that you can purchase, prepare and serve a meal for – then make it a regular thing. Help your kids see the world outside their own by getting to know the people there, seeing their faces, hearing their stories.

There is a reason we don’t use the word “share” on the third jar (despite my intense love for alliteration in learning).  It’s because sharing often indicates that you will get back what you give. Truth is, you do get back what you give (often far more) but since it’s rarely tangible it’s something that has to be experienced to learn, especially for little kiddos.

Giving is a heart matter, and like all important lessons, it is not learned overnight.

This Christmas we gave our boy some ideas about how to use his give jar money. He chose to buy toys for the Operation Christmas Child shoebox we filled. He loved taking his money out of the jar, walking around the store choosing things for someone else, and handing his cash to the cashier. It didn’t go quite as planned this year (he wanted to keep some of the toys for himself), but he’s still learning – and frankly so are his parents. Giving is a heart matter, and like all important lessons, it is not learned overnight.

I’ll have more on this topic in the future as we learn more, but for now remember that we have to be the people we want our children to become. The progression of learning in kiddos goes a little like this: “Mama, let me see…”, “Mama let me help…”, “Mama, let me do…”, so that’s how you teach them.  Let them see you save, let them help you save, let them save for themselves, etc.  And if this is something you are just beginning to learn, it’s ok to learn with your kids. Read together, seek advice together, learn from mistakes and change behaviors together. Work hard, plan well, spend wisely, and save aggressively together. Then with the money you have, give abundantly together!

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