Teach Them Early

Dear Dave,

How early should I start teaching my kids about money? Also, how do you feel about giving kids an allowance?

Cathy

Dear Cathy,

I think you should start teaching kids about money as early as you start teaching them about sex - which is the first time they show any interest. Make sure you keep it age-appropriate, and don't over-answer questions when they're young.

Neither of these things will amount to a one-time talk, because they're both just parts of life. That means they're ongoing processes that will last for years. If you have one talk at an early age with your kids about money, then they're probably not going to remember a lot of it as they get older. If you have just one talk with your kids about sex at an early age, you're liable to wind up with a bunch of pregnant teenagers!

To answer your second question, I hate the idea of an allowance for kids, because it makes the whole situation sound like welfare. We put our kids on commission at an early age. They had chores associated with certain dollar amounts, and if they worked, they got paid. If they didn't work, they didn't get paid. It was as simple as that. Then, they would split their money between three different envelopes - one for saving, one for spending, and one for giving - and we would teach them to do each one wisely.

Kids need to emotionally connect work to money at a young age. If you don't teach them four major concepts - spending, saving, giving, and work - you're going to have major problems by the time they're 10 years old!

-Dave

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