Advice from Nashville's Financial Guru Dave Ramsey
By Dave Ramsey
Author of Financial Peace and The Total Money Makeover
When is too young to start teaching about money?
My wife and I have a two year old son and I’m wondering when is a good time to start teaching him about money? How should we go about doing that?
Richard in Houston, TX
We usually recommend you start out with kids who are three to four years old. That depends on the child’s temperament, of course. My oldest daughter is very industrious and very precise. So it was very easy to start her pretty young. Some of the other kids weren’t quite so easy to start out. You need to start no later than four or five years old.
When a three year old cleans their room that really means that mom does 85% of the work and the child gets all the “atta boys”. You do this process with a three year old to teach work and responsibility, not to get the room clean. We’re just trying to teach principles. They’re not allowed to just sit around while mom or dad does the cleaning, but parents are willing to do most of the work in the early stages. Then they can transfer more responsibility to the kids as they grow older.
The younger the child, the quicker the feedback needs to be. With a really little guy who’s just learning this, give them a big clear jar in which to save up their money. They have to be able to see the money build up in there. When they do the job, give them their commission right then. If it’s dollar bills, wad up the money, rather than folding it up, so they can see it start to fill that jar. Children are very visual and they need to see concrete results very quickly for their efforts. You can’t wait till Saturday to pay for a Monday cleanup with a four year old. They don’t have a memory that long.
Then have a big-deal trip to the toy store to spend the money they’ve saved. I remember once my daughter had saved up for Celebration Barbie. Then she found out it was $18 and she only had $12. It was really hard for me not to kick in the difference. But we went back later when she had all of the money and it really was a big celebration when she succeeded in buying that doll with her savings.
The important thing is that you teach them the value of money. Most people never teach their kids anything about it. They just hand them money, hand them money, hand them money. Then the kids are grown up, have to go out and work and they don’t like it. Just start real light and enjoy the process.