Children can begin to understand simple principles of logic as early as four years of age. By the age of seven they are capable of complex problem solving and able to consider the feelings and needs of others as well as their own. It is crucial to begin teaching children about money in the early years of their lives because they are competent to learn important lessons on responsibility and how to save for the things that they want.
Birthday money seems to be a large source of income for children at this time and can be an excellent way to instruct them on how to save for desired items. Instead of purchasing those high-priced items for them allow them to accumulate enough money to obtain them on their own. The shopping trip to retrieve the items will be exciting because the child will have saved the money on their own and feel as if they earned the reward.
Christmas lists for parents are often a difficult time financially because many times children do not understand that there are limits in this case. If Santa is still in the picture then allow the child to place the most important items on this list, requesting that they limit them as he is very busy. Then provide them with a budget for the parents list. Tell them to choose whatever they like as long as it stays within the budgeted amount. This is a great way to teach kids about money. This allows the child to realize that items do have a price and they learn to scrutinize their own selections.
Encourage children to save their pennies in a bank and that they too will accumulate in a short period of time. To further encourage the savings a suggestion of matching whatever they save can be made. This is good for younger children not yet receiving an allowance, but wanting to earn money to purchase items.
For kids that are old enough to help with simple tasks and receive an allowance it should be started as early as possible. Learning to work for money is something that needs to be taught very early. Assign a particular task list to be completed daily and when these tasks are completed they can be paid either on a daily or weekly basis depending on their age.
If at all possible, take your children to visit your place of business. Allow them to get the idea that parents actually do not play all day while they are at school. It is important for them to see that life will be a transition into working and that things will not be given to them.
When teaching kids about money, try and make it fun and they will be interested in learning about this topic more.