retirement

My Thrifty Toddler Already Knows How to Save

How young is too young to teach kids about money? We started with our daughter at 2, and our easy-to-use, three-piggy-bank method taught her, and us, a lot.

When I got my first job at a pizza restaurant in high school, my parents taught me a lot about money. Before my first paycheck hit my pocket, my dad helped me open a checking and money market account. Why did he do this? To teach me the value of saving money.

On the other hand, my wife grew up in a family that didn’t openly talk about money. Sometimes there seemed to be plenty of money, while other times there wasn’t. Without being taught the importance of saving, there was no reason not to spend most, if not all, of every paycheck.

When we got married, we had to work through how we would meld these two approaches and decide on our family money philosophy.

What did your parents teach you about money growing up? Was money an open conversation in your family or a taboo topic? Regardless of their intentions, each of our parents taught us something about money. Here are some tips for how to purposefully teach your young children about money and make it fun!

From the time that our daughter was 2, my wife and I have been talking with her about money. There are several things we want her to know about money at her early age, but one of the first things we wanted her to understand is that money is earned.

Even at 2 years old we found household activities to entrust to our daughter and tracked her weekly progress with a smiley face reward chart on our refrigerator. These chores were easy, such as cleaning up toys before nap time, putting dirty clothes in the laundry basket, and setting the table (you should see all the creative ways a toddler can set the dinner table!). If the reward chart is filled with smiley faces at the end of the week, our bright-eyed mini-entrepreneur is rewarded with four shiny quarters! That's right, small investment, but big lessons to learn.

Here's how the four quarters get allocated weekly, and the lessons we can teach our children:

Share/Give

The very first quarter gets put in a special piggy bank for the purposes of sharing with others. When the piggy bank gets to a reasonable dollar amount ($10-$20), we give her some ideas for how to help others with her money. Most recently, our little girl (who is now 3) donated money to help bring clean water to people in parts of the world that she has never heard of. She loved it and I got choked up.

Save

The next quarter is for her enjoyment … but not today. Maybe she wants to buy something shiny from the Disney store, or a very pink pair of Poppy light-up sneakers from the movie Trolls. No matter the desires of her heart, this piggy bank teaches patience and delayed gratification. You should see how proud our daughter is to buy “big things” with her own money.

Spend

Lastly, we have her put a quarter in her “spend” piggy bank. The fun aspect about this one is that she doesn't have to wait long to buy something fun! Trips to the Dollar Tree or the dollar spot in Target are a regular weekend event in our family, and it's fun to watch her search for the perfect "treasure"!

Most Importantly, Learn

Share, Save and Spend: These are three lessons we want our daughter to learn about what to do with her money from an early age. What's that? Oh yes, there's one quarter left. Each week, our daughter gets to decide where to put her last quarter. Here's where the real parenting strategy comes in.

Although she's free to choose wherever she wants to save her last quarter, if she decides to place it in her Share or Save piggy banks, we automatically match it with another quarter! Free money! Picking up on this early, it's fascinating to see our daughter choose delayed gratification or, even better, sharing with others over a trip to the Dollar Tree. We have quite the generous little saver on our hands for now.

To make sure our lessons hit home, the final part of this lesson is to talk about how Mom and Dad do just the same thing with their money. We have automated giving and saving so that those are the very first “quarters” out every month. We truly believe these are the most valuable things we can do with our money, so we prioritize them and have a plan for them.

We make talking about money casual, but important, in our family. We discuss decisions not to spend on certain short-term sprees so we can enjoy other things in the long term. Anyone with small children knows that our kids will imitate what they see. We're doing our best to lead our daughter in a financial path we hope she will emulate.

About the Author

Josh Monroe, CFP®, ChFC

Associate Wealth Adviser, CI Brightworth

Josh Monroe is a CERTIFIED FINANCIAL PLANNER™ practitioner and a Chartered Financial Consultant designee who listens actively and plans thoughtfully to help clients achieve their goals. He joined the CI Brightworth team in 2019 as a Financial Planner. Before CI Brightworth, Josh spent eight years at a leading insurance and investment firm in a variety of roles, including compliance and supervision. Josh is passionate about financial planning and making complex concepts easy to understand.

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