How We’re Teaching Our Preschooler About Money

Saving Money

By: Financial Pilgrimage

April was Financial Literacy Month, I wanted to share a few things we’re doing to teach our preschooler about money. These techniques are not new or groundbreaking, though already seem to be having a small impact after only a few months. I could go on about the benefits of financial literacy in general. It needs to be taught more in schools. And if schools aren’t going to make it a priority, then it’s up to us parents to ensure our kids grow up to be smart with money.

Our children will likely grow up much better off than me or my wife when we were younger. With all the positives that come with their situation, there are some negatives as well such as a lack of appreciation and entitlement. I want to give my kids a great life, but don’t want to spoil them. That’s why we’re trying to get an early start to teach financial literacy in our house. The following are a few examples of how we’re teaching our three-year-old about money.

Spending, Saving, and Giving

A few months ago we started paying our three-year-old a commission of five dollars per week to complete four chores every day. The chores include making his bed, feeding the cats, picking up his toys in the living room, and cleaning his room. Every day that he doesn’t complete a chore he is supposed to lose one dollar.

We aren’t as hard-nosed with this approach as it sounds. There are plenty of days where we help him with his chores or look the other way if his room isn’t perfect. There are other days where we ask him to feed the cats and if he refuses we end up taking a dollar away.

Overall, I’d say he completes his chores on his own about 60 to 70 percent of the time, which is pretty good for a three-year-old. The point isn’t to strictly enforce the process at this point. It’s more to help him make the connection between doing work and making money.

At the end of each week, he puts $3 in the spending jar, $1 in the saving jar, and $1 in the giving jar. The jars are made of clear plastic so he can see the money adding up. We haven’t spent any of the money in his jars yet, though with garage sale season coming up he’ll be taking a few dollars out to buy what he wants.

Individual Stocks

Late last year we emptied out our son’s piggy bank for the first time. To our surprise, he had collected almost $200. Most of the money was from birthday and Christmas gifts from the previous three years. He usually gets toys from family for birthdays and Christmas. Every once in a while someone has given him a $10 or $20 bill that went in his piggy bank.

We ended purchasing two individual stocks via the Robinhood app with his savings. This wasn’t his decision, but he also didn’t push back against the decision. Honestly, I’m not sure he knew exactly what we were talking about.

The Robinhood app was surprisingly easy to set up, and even easier to purchase the individual stocks. There are no fees to use the Robinhood app either.

The two stocks we ended up purchasing were Berkshire Hathaway (class B shares) and Under Armor. I don’t think he is anywhere near ready to fully grasp the concept of stocks. However, I do sometimes make comments such as, “you are a part owner of Under Armor”. In time hopefully, these comments will start to make more sense allowing him to make the connection between everyday products and the stock market.

Even though he hasn’t shown much interest in the stocks yet, every once in a while he will ask to “see the numbers” on my phone. I’m pleased to say that the value of his “portfolio” has increased by about $20 since our original purchase. It’s amusing to think of my three-year-old having a stock portfolio. 🙂

Going forward we will use his money from the saving jar to purchase additional individual stocks. We may even roll the dice with small-cap or penny stocks since we’ll likely be throwing less than $50 at new stocks. While I am personally more of an index fund investor, it would be more challenging to get him excited about investing in something like VTSAX (Vanguard’s total stock market index fund). As he shows interest in products or services I will ask him if he’d like to be a part owner of X company. Again, I don’t expect him to fully make the connection at his age but in time hopefully, it makes sense.

Giving

We experienced a cool moment last weekend. We were at our Aunt’s house and had completed an Easter egg hunt earlier in the day. Our son ended up with six or seven quarters that he planned to bring home for his jars. Instead, he decided to donate his shiny new quarters to a better cause.

Our Aunt goes on mission trips to Uganda every few years and showed him a small piggy bank. She explained that the money would be used to buy food for children in Uganda who are hungry. I was so proud as we watched him put his quarters in the piggy bank without being asked. He wanted to give his money so the children had food to eat.

I’m not sure if his action was the result of some of the things we’ve been teaching him. After all, we’ve only been doing this for a few months. However, it was a positive sign that even at a young age he understands that not everyone is as well off as we are. We will continue to do our best so our kids grow up to be generous and give back to those less fortunate.

How are you teaching your kids about money?

I’m hoping that by being intentional we can ensure our children are financially literate when they grow up. We still have a long way to go in this parenting thing, and every stage so far has had challenges. I know it gets more complex once they begin approaching the teenage years. Regardless, all we can do as parents is our best and hope that we can raise money-smart kids who aren’t spoiled little brats!

How are you teaching your children, nieces/nephews, or students about money?

Republished with the permission of Financial Pilgrimage.

Steve handles the operational side of Rockstar by keeping the systems running smoothly, social media accounts active and curation buttery smooth. He also answers to the name “Do-It-All Boy”.

Steve is also the founder of ThinkSaveRetire.com – a site where he shares ideas and techniques on how to retire from your 9-5 job and start to enjoy the virtues that life has to offer outside of full-time work. Life is about more than fluorescent lights and gray cubicles!

Last modified: May 28, 2018

7 Responses to :
How We’re Teaching Our Preschooler About Money

  1. Ian Bond says:

    I have 9 and 12 year-olds and we struggled with this. I’d often prepare a lesson or topic fordiscussion for the dinner table, like my dad did. I engaged them in debate. With some effort it worked ok. I still felt like there was more I could do and a better way to reach them.

    Then I found Robert Kiyosaki’s “Cash Flow” board game series. They love them! Gamifying the experience was one huge win, but being able to debate the decisions we make every move was another. It’s also 2-3 hours where they don’t actually want the dopamine hit of electronics.

    I live overseas and now several foreign families all have purchased the games and my kids can play with their friends. This has been transformative for us!

    1. I’ve heard great things about Cashflow! Hopefully my kids will be willing to try it out when they get older. It sounds like you and your kids are doing great. Thanks for commenting!

  2. theFIway says:

    My wife and I are doing something very similar with our 12 and 10 year old kids. I tried a few of the methods you did, but found a pocketmoney app that they engaged with better.

    It’s been 8 months or so now. My daughter has reached Financial Independence relative for her age. The interest she earns covers all her fixed expenses. My boy on the other hand, is working overtime to earn more so he can buy more “crap.” Like Fortnite dance emote kinda crap. The saving philosophy hasn’t quite taken root in him yet.

    1. Holy cow! I’ve never heard of a financially Independent pre-teen. That is amazing.

      It’s crazy how two siblings can be so different. I’m sure the lessons you are teaching your son will pay off eventually.

  3. That giving part made me smile. I don’t have a kid of my own yet, but when I do I don’t know what kind of father I will be. I didn’t have the best example of male-figures in my family growing up. But regardless, if I can raise a caring person, I will have considered myself a successful parent. It sounds like your little guy is developing his own sense of caring, and that’s amazing!

    1. Thanks! He has his moments where he can be self centered and rude, but there are flashes of caring and generosity in there as well.

      You sound like you’ll make a great dad!

  4. This was inspiring! I have a son that just turned 3 and I’ve been starting to think about introducing the topic of money to him. I like the stock idea and thanks for the context on the Robinhood app.

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