Kids and Money

Kids and money. Most early childhood experts agree that the sooner a child learns about money, the greater their ability to manage it in later years. When is the right time?

Some people think that by the age of six the child should definitely be receiving weekly amounts to learn how to manage it. Others believe that depending on the individual child, the age of three, four or five is not too young. An indicator for readiness may be your child’s interest in money. Counting, stacking, regrouping etc. will reveal an understanding of amounts. 

Another indicator may be your child’s material wants. When you go shopping, is there frequently a request for items or treats? If so, an allowance will give your child the opportunity to learn much about budgeting, saving and using money in the real world.

Another individualized aspect is how much. Some believe it has to be enough to experience its impact. One dollar for each year of your child’s age per week is suggested. This can work well if you are encouraging your child to divide the money into different allocations. You can have a savings for larger items; a discretionary fund and also one for charity. Kids need to save for something concrete so they can see the results of their efforts.   Saving helps to build in the sense of delayed gratification something that later in life is an indicator for success.  Some parents will do matching funds if the child wants a large item like a new bicycle or special toy. The value of money is brought home through this patient process of saving and waiting.

Savings accounts are rather abstract to children under the age of six. The concrete experience of money; the coin recognition, counting and allocation are the experiences that inform and educate. Gifts of money can be divvied up so that a small portion goes directly to the child and the rest into an ongoing savings account if one is established. When the child is older he will be able to understand and enjoy watching the money grow in an account, and seeing that the initial money is making a little more with regular interest added.

As a rule, it is thought that allowances should not be tied to chores. The child’s ability to contribute to the good of the family unit can then be encouraged for its own sake. The allowance is part of the benefits of being a respected family member. Chores can be discussed and decided on with the child and encouraged as part of the daily routine. The earlier families see the importance of this, the easier it is. Children under six years old are at the prime age to contribute to the welfare of the family in this way.

About The Author

Lois Olson

Founder of The Montessori Children's House Inc. Laramie, Wyoming Montessori Primary Certification 1973
Systematic Training for Effective Parenting facilitator certification
Thirty eight years of experience working with children ages 3-6
Twenty five years facilitating parenting groups
Ten years facilitating teacher training
B.A In Psychology

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