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When and How to Teach Kids About Money Management – What’s the Right Age?

A topic that I’ve seen written about quite a bit lately is the proper time to start teaching your children about money. And frankly, some of the advice I’ve read borders on the ridiculous. I have actually heard some people claim that you should start teaching your children about money as early as age 2! That seems to me like overkill. I doubt that a child of that age can even process whatever you might be teaching them, let alone retain it.

Here’s what I’ve learned as parent about kids and money.

Let Kids Be Kids

My son just turned 4, and it is very important to me that he grows up with the proper perspective on money and good financial habits, such as saving. But I have yet to have any kind of serious conversation with him about the right way to handle money. Why? Because he’s 4 years old! Childhood is a special time, and for the most part, it should be filled with fun. Certainly learning plays a major role in childhood, and there are good financial lessons to teach kids about money, but there’s just no point spending much time with toddlers talking about money.

Teach Them through Your Actions

However, just because I’ve yet to specifically discuss money with my son does not mean that I haven’t started teaching him good habits. I do it through my actions. Children learn a lot more from the actions of the adults in their lives than most people realize. I think my son understands, or is at least absorbing, what I am doing when we are out shopping and I am choosy about what I buy based on the price. He especially likes it when I announce, “OK, now that I saved some money on that, we can go get you a new toy!” Those kinds of lessons speak volumes. Teaching kids about money is especially important if you’re going through tough financial times.

Keep the Spoiling to a Minimum

Another way that I teach my son about money is by not “spoiling” him with toys and gifts. When I was a child, my parents didn’t have much money, so being spoiled wasn’t an option. Because of this, I was able to get a lot of great financial advice from my parents.

Even though I do have the means to spoil my child if I wanted to, I think that sends the wrong message. If my son had his way, we would go to the store every single day and buy a new toy. But we don’t. If we did, my son would learn that money is in infinite supply and that it can be spent on whatever he wants, whenever he wants. I provide for my son, and he probably has a few more toys than he should, but he’s certainly not spoiled.

What Is the Right Age?

So when should you start teaching your kids about money? I am no child “expert,” but I can tell you one thing – it isn’t at age 2. I don’t have a specific timeline for when I’ll start, but I am guessing it will be around age 5. But there’s no reason to rush into this with your kids – childhood is a time for goofing around in the backyard, dressing baby dolls with pink dresses, and learning how to play nice with others. Lessons about money can be put on the back burner for a little while, so your kid can just enjoy being a kid.

What are your thoughts on the right age to teach kids about money? Do you have a number in mind?

David started his own personal finance blog, YourFinances101, in June of 2009 and published his first book on ways to save more and spend less called "Don't Be A Mule..." Since then he has been a regular contributor for Money Crashers. He lives just outside Atlanta, GA and most all of his free time is taken up by his amazing three year old son, Nicholas.