I’ve carefully watched the debate over chores and allowance, whether kids should have to “earn” their purchases, and when working for cash is age-appropriate. Parents will continue to disagree on this topic forever, it seems, but one thing can be agreed upon between the camps: Some kids are just NOT old enough to get “money.”
So, how do parents know when it’s time to have “the talk”?
Here are some tell-tale signs that your kids are old enough to understand the concept of cash.
1. They value money
All kids think they want money. Even my 4-year-old “oooh”s and “ahhh”s at the five that comes in his birthday card each year.
What kids do with their cash after they receive it, however, can be a stunning signal of how prepared they are to handle it.
Finding a wadded up bill in the toy box, or constantly finding buckets of change in their dirty pants pockets are surefire indications that they are not equipped to go through the allowance ritual. Parents can probably tuck away their gift money into a savings account until they are old enough to practice wise stewardship of their greenbacks.
Once you start seeing your kids counting and otherwise hoarding cash, you are probably OK to start reviewing basic money concepts with them.
2. They ask questions
“Where is money made?” “Why do you write checks?” “Can I have a check?” These are all common inquiries of little minds who want to know more about the paper that makes our world go ‘round.
Answer them, by all means, but remember that their little minds can only absorb so much. Start with the basics, like the value of coins and bills, and begin assigning value to the little trinkets that have captured their fascination.
The rest will come with time. (You can also find some very good financial education products for kids that can assist you in the process.)
3. They want more
Once kids figure out that they can buy stuff with money, they will want more and more of it to fuel their candy, junky plastic toy, and movie rental addictions.
If you haven’t already established some kind of method for saving, giving, and spending, now is the time to do so.
In our family, we practice a 10% giving, 20% long-term saving (like college), and 70% spending ritual. (Younger kids get less for spending – 40%, and the older kids get the maximum 70%. Everything else goes into the college fund.)
If you want to encourage the saving for long-term goals, you may also practice a “match” arrangement. For example, we match 100% of everything my kids put into their college funds each month. It helps them to see how money can grow, and it stands as a substitute for the interest that accounts just AREN’T earning these days.
4. They demonstrate understanding
When kids can show that they “get it” with their allowance, they can get deeper into the mechanics of money.
You can discuss matters of credit and interest, for example, when they have done an adequate job of keeping their money in a safe place, can count and make change, and exhibit a desire to continue their education.
If at any point they lapse in their responsibility, you can certainly review principles or put the money up until they can get a better handle on it. (Our 5-year-old did very well for almost 6 months. Then we found that he had given all his money to “the dog” by putting it in the dog bed. Back to square one, I think.)
What signs have you seen your children demonstrate that alerted you to the fact that they were ready to take on more money matters?
|Linsey Knerl is a homeschooling mom of 5, the Community Manager for Wise Bread.com, and a freelance blogger and writer. She co-authored the recent 10,001 Ways to Live Large on a Small Budget, and you can read more about her at Lille Punkin’ and The Freelance Farmer.|