Author Topic: How to start teaching our 4 year old about money? (Allowance?)  (Read 351 times)

CloserToFree

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Now that our older son is 4 and a half, I'm realizing that we need to start teaching him about money. I'm starting to read Ron Lieber's book, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, and I've heard that the bottom line is to give your kid access to small amounts of money from a young age, and that the money (allowance) should NOT be tied to chores. (Idea is that chores should be done bc they need to be done, not bc the kid wants to "earn" $$.)

What do/did you guys do with your young/ preschool-aged kids to teach them about the value of money? Do you give them an allowance and if so what are the parameters (what do you make them spend their own money on vs. you paying for it for them? how much per week? etc.)?

I feel like we're behind the ball on this but we recently have started explaining about how things cost money (usually in explaining why we can't or don't want to buy something he wants), saying that Thing X costs money and if we spend our money on that, we won't have money leftover for "fun things" (ice cream was one example I tossed out last night). He seems to get that, at least so far, but I feel like we need to step up our game, and this forum seems like the best place to crowdsource smart ideas.

Also interested if anyone else has read Ron Lieber's book and what your Mustachian take on it is. ETA: paging @whdwight - just read through your excellent bank of dad-type spreadsheet pinned post and looks like you've read this book. Curious about your thoughts. Love the spreadsheet idea but I'm thinking it's a little complex for a 4 yo, since he can't read yet - but maybe not?

Thanks!
« Last Edit: June 06, 2019, 10:12:31 AM by CloserToFree »

La Bibliotecaria Feroz

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #1 on: June 06, 2019, 01:45:38 PM »
I haven't read that book in particular but my kids had an allowance from a very young age. I did save-give-wallet, so at least $3 at a time--they can have one for whatever, one for saving, and one for giving. Saving is really just slower spending at that age--I don't make them save it very long. With give, we do Heifer International or Toys for Tots or maybe shop with it for a toiletries drive or whatever is going on.

Mostly, they have to use their money for whatever stupid kid stuff they want to buy. (My kids are now 7 and 8.) Toys when we are shopping at Goodwill, frozen yogurt at Costco, etc. "Did you bring your money?" is a wonderful answer :-). They also have to pay for things they break around the house (most recently, they pulled a curtain bracket out of the wall, anchor and all, and broke the latch on the gate) and replacements for anything I buy them that they lose or destroy. So, like, I bought the first pair of snow boots, but when they mysteriously disappeared, the kid had to chip in half of the second pair.

Good luck!

ketchup

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #2 on: June 06, 2019, 03:18:02 PM »
Speaking as a former kid:

Trading cards (Pokémon, then Magic: the Gathering) and then video games (Pokémon, and then everything else) were my first "I want to spend money on things" items that hit around age 8.  But really I think some of the magic was gone from my "allowance" from my parents' perspective because I would only want to buy things pretty infrequently so we'd just tally up how it'd been since the last time I bought something.  I think they gave me $1/week starting around age 8 and it kind of unofficially stopped around 12 when I started seeing checks from family on birthdays and holidays, and then getting my first job at 14.

And despite my mom's wishes, I had no desire to ever buy clothes (this persisted into my teenage years: spending hundreds of dollars on a computer was clearly madness, but if I had spent that money on clothes she wouldn't have batted an eye).  This killed any "you need to spend your own money on clothes" ethos that could have been built (if she didn't buy me clothes, I would have happily worn my older clothes forever).  I'm not quite sure how I feel about this looking back.  It was basically a game of chicken that I didn't even realize I was playing.  I just didn't care (...and still basically don't at age 28 - currently at work wearing the same dress shirt I interviewed in eight years ago).  I don't think I even bought myself a stupid T-shirt until I was like 17-18 and then it was tech geek shirts that made her roll her eyes. 

My point is that kids are stubborn, and your intentions don't matter. :D

reeshau

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #3 on: June 07, 2019, 05:33:44 AM »
I also have a (precocious) 4-year-old boy.  I did read that book, but it was some time ago, so I would have to review it to pull apart its points vs. my mental jumble of all the parenting reading I was doing 2-3 years ago.

Our approach is also centered around give-save-spend.  We have a 3-part bank, and any time he gets money (birthday, chores, and he's really good at finding money at the train stop) we discuss what we could do with it, and what balance that is.  For a while, it was all "spend," because he was (and is) very into Hot Wheels.  But overall, it is surprising how often he chooses save and give as well.  I agree that save, at this stage, is goal-oriented spending:  saving up for fun on a vacation, or a big Lego set, or something.

To keep down the torrent of wants, we have a (rough) maximum of toys he gets.  At this point, if one comes in the house, one needs to leave.  This is another give opportunity, too.  (or could be money-focused, but we aren't up for a car boot sale nor are they worthy of eBaying)

We don't really give him allowance, because his grandparents spoil him, and his banks don't empty.  He is expected to do all of "his" chores gratis:  putting clothes away, helping set the table for dinner, cleaning the house, etc.  What we did set up as an experiment is to give him a chore to help refill the cat's water, for 20 cents a time.  (if done with no spills--10 cents if there are some issues)  We do not prompt him to do this--it's when he notices the need.  In addition to money lessons, we are interested to see how he does in caring for someone else--a prerequisite for ever getting a puppy, which will take a lot more care.  As I said, this is an experiment at this point, so whether we go the pay-for-chores route or a flat allowance will depend on the lessons he seems to need reinforced.

merula

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #4 on: June 07, 2019, 08:23:58 AM »
I read the book, and thought it had some good advice but I disagreed with some of his views overall.

My kids are 5 and 7. They've been getting an allowance for the past year and a half or so; $5 each per week, $2 in their wallets, $2 in their savings accounts and $1 to give away (just in an envelope).

I was talking to another parent the other day, and they thought $5/week was high, but then realized that I made my kids pay for things out of their own money that they had been paying for themselves: school fundraisers (giving money), school fairs (wallet), toys they really wanted, presents for each other, lemonade stands, garage sales, etc.

Recently, we've been having some major issues with leaving lights on, so now they have to pay me a quarter whenever I find a light they left on.

Enigma

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #5 on: June 07, 2019, 08:37:54 AM »
I lived in a house where we were taught about money at an early age.  We were given 50 cents for each book that we read, 10 cents for not peeing the bed (my brother was bad at that)...  As we got older we had house chores ($2 for cleaning teh living room, $5 for doing the dishes and cleaning the kitchen, $5 per lawn we mowed (dad's rentals), and a few other chores.

It is also worth noting that we were required to put 70% of the money in our savings account.  Every few weeks we would go to the bank and we had savings books.  They would print all our interest on it and then print what we were depositing.  The same was required when we got jobs - 70% saved (McDonalds for me, Burger King for my brother).  My brother at the age of 18 bought his first rental from the money he had saved.  I used my money to pay for most of my college.  But both of us still save a lot today.

Enigma

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #6 on: June 07, 2019, 08:38:53 AM »
Also we got paid for grades.
$5 for each A, $1 for each B, broke even on C, Owed $1 for a D, and owed $5 for an F

Omy

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #7 on: June 07, 2019, 08:41:30 AM »
I don't have kids, but my mother made a chore list (other than clean our own rooms, clear table and wash dishes which were to be done without payment). Dusting the house was worth 50 cents, cleaning a bathroom was $1, cutting the grass was $2, etc. The system worked well because each kid could sign up for what they wanted to do each week...and do extra if they were saving for something.

CowboyAndIndian

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Re: How to start teaching our 4 year old about money? (Allowance?)
« Reply #8 on: June 07, 2019, 09:27:38 AM »
I gave allowances for both of my sons. $1/year (so a 5-year-old would get $5).

One third, they had to save for college. One third for a big purchase that the wanted (e.g. one of those Nintendo/Sony game consoles) and the other third they could spend as they wished. Along with this, I taught them about investing (age appropriate ways).

It was interesting how quickly they started distinguishing between their money and mine! If I was buying, they would gladly eat an ice-cream, but if they had to pay for it, suddenly they did not need it ;-)

Well one of them is 27 now and has a net worth more than what I had at 40. The other is still in college but I know he will be great with money when he starts earning!