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Nov 8, 2009

Savvy Money Skills: When Is Too Young?

Most parents realize teenagers need to know basic money management. But how young should you start teaching savvy money skills to your children?

Some may think preschool/kindergarten age children are too young for financial lessons, but this is a good time to begin laying down a strong financial foundation.

Children who are three to five years old are beginning to understand money gives them the power to buy stuff. However, they do not have a clear idea of what money is
worth or how much things cost: they may tell you a house costs 50 cents and a gumball costs a “million billion” dollars.

Identify money, both coins and bills If children are going to spend money responsibly, they need to be able to tell a penny from a dime and a quarter from a nickel. To help children learn to identify coins, let them play with some real coins, separating them into piles by color and size. As they play, you can talk about how much each coin is worth and its name. You may not want to give your children real bills to play with, but you can buy play money that looks somewhat realistic. Your children will enjoy playing grocery store and bank with this play money. You can also play board games that use play money, such as Monopoly Junior.

Make good trades Children are learning that they can trade money for things. Help them make this connection by letting them pay for an item when you shop or putting coins in a vending machine.

You must also help your children make good trades. A youngster who enjoys baseball cards may decide to trade the neighbor boy $20 for his collection of worn cards. They may also be thrilled to trade a ripped-up five-dollar bill for a shiny new quarter. Make it a rule that a grown-up has to approve all trades.

Make choices Lessons of life started early last longer. Children need to learn they can’t have everything they want and they must make choices. Give young children the
opportunity to make simple choices, such as buying apples or oranges when you go to the grocery store. Explain that you aren’t choosing to spend the money to buy both.
Learning what a choice is and what to do if you discover the choice is wrong, or not the best choice, is one of the most important lessons of life. Start creating your
financially savvy child today with these tips.

How To Raise Financially Savvy Kids offers more tips and strategies on giving your children money savvy skills. Click HERE and find our more ways to help your children now.

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