Kids & Money (Starting Early)

At what age should we start talking to our kids about saving, and the mechanics of money?

In my opinion (from personal experience) around the age of 5 is good but not everyone has a Dad/Mum that has a job that entails telling people what they could do with their money, but that does not preclude you from starting early.

Before the kids arrived we had a habit of putting any loose change into money jar. As they got that little bit older it was agreed that the contents of this jar would be theirs and any loose change they got, also went into this. When it is full they help with the ‘counting’ of the contents and put it in the money bags.


The notes were a different matter. Accounts were opened in their names and any gifts of money were lodged here. The contents of the jar were lodged to the accounts also.

They knew someone, close to them, who was in college and they thought that it was something they would like to do also. They were aware that you needed money to go to college so, when asked what they were going to buy with all the money they were saving, the reply was, ‘It’s for college’.

At this age they are too young to earn some money by helping out. It was agreed with the 6 year old that every so often, if she did not demand too much stuff, that I would pay her interest on the money she saved. I could not believe how quickly she grasped the concept. ‘If I don’t spend my money, I will get more money? Wow!’ ‘What if I want to buy something?’ ‘If it’s small we can get it for you, but if it’s something big you should probably wait for a birthday or ask Santa for it.’

It was with the younger of the two that the issue of the bank arose. ‘Can we get the Princess Barbie DVD?’ ‘No, I have no money on me.’ ‘But you can get it from the bank!’ It was at this stage that we started the conversation on how the money got in the bank in the first place, that it had to be earned from the work that you do, and that there was not an unlimited supply of it when it was needed. She took it on board!

It’s a good idea to get the kids involved in opening an account and to let them hold on to the book. Include them in the ‘counting’ of the loose change.

If you make a deal on paying ‘interest’ when they don’t spend their money, you have to stick with it and pay it when it’s due. Make an issue of it.

Let them have their own purse or wallet where they can keep a limited amount of money for emergencies or holidays.

Next stop, investing and compounding………….

PS : If you have a simple method that works for you and your kids, please add it as a comment.