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What's the Right Age to Start Teaching Kids About Money?

If you think your child is too young to learn about money - think again. Children receive "money messages" every day. Starting around age four, children get money messages that span from what they see on television commercials to what they see inside the refrigerator, to what they see their friends wearing and playing with, and yes - what they hear you talk about as a parent.

One costs you $12.92 to use per year. One only costs you $2.58 per year. Which is which?

Which saves what?

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Does your child use

his backpack safely?

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It now costs $250,000

to raise a child!

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She may not be aware of the complexities about money or know the meaning of a recession or economic recovery. But you can rest assured that her little ears are listening in on your conversations about money. And she notices what you are and what you are not buying, and what items you say "yes" to and put in your shopping cart. 

Here's the bottom line --- if your child can count --- count that as your green light that you can begin to teach your child some financial ABCs.

Pay for Chores Completed

While it is easy to think that children should not be paid to do their chores, taking that attitude can also lead to a missed opportunity. Honest pay for honest work is a virtuous principle to teach to your child. It builds a foundation to teach your child that working for a living is something they will have to do. It also teaches a child to take pride in fulfilling a task and giving it their best.

Come up with a small pay for chores, like one dollar for vacuuming the house … fifty cents for washing the dishes two times each week … and five dollars for bringing home high test scores.

Teaching these principles sooner rather than later, will set the stage so that your child develops good work ethics that will last a lifetime. It will also set the stage to teach them how to negotiate for raises based on their performance.

How to Start

Start by teaching the difference between wants and needs. Ask her to name three items she would like for her birthday. Then take three slips of paper. Use one slip for her to select a "want" and the other two slips to have her select "needs." Use this as a teachable moment to describe the differences between a want and a need. Pay attention to what she selects as a want and what she selects as a need, and whether she changes the items once she understands the difference.

Use this exercise as a starting place to hold continual conversations about money. And keep in mind that understanding the difference will take time for her to grasp, understand and appreciate.

Let Them See How Money Grows

Get rid of banks your child cannot see through, like colorful plastic banks, etc. Give your child a clear bank that lets them see how their earnings grow. Then go a step further. Take something simple, like finger nail polish and draw a line on the side of the bank. Let the line represent a goal for something they want, like a special toy or a new pair of sneakers.

When you pay your child for chores, he or she will be anxious to put the money into their bank. They will learn that inch-by-inch, they are getting closer to the day when they have earned and saved enough money to buy what they desire. And most importantly - they will begin to comprehend the relationship of how work and time on a job equate to earning money.