Is 5 years old too young to start eductaing about money

This is directed to the more mature members here who have had children and have seen how they have grown up with the responsibilities of money managing and investing. Also not to fall into the same mistakes that we made.

We have a 5 year old boy, 6 in dec, only child, and is considered by many as a little adult. I, like most parents want to see their child be successful both morally, academically and financially.

We have started a bank account for him over the last year and he is starting to get the idea of his $5 per week pocket money and putting it in the bank and now he is starting to see it grow. I made a spreadsheet for him where each time we go to the bank the amount and date are entered and graphed. Now he is allowed to spend half of his pocket money and save half, trying to teach him money management here.

He is now playing monopoly and he really enjoys that, there is also an apple monopoly app he likes to play. He is understanding about the idea of owning a rental property and having someone living in your property, giving you money for the service and we pay the bank back. That sort of thing.

I guess my main point is if I focus too much on this with him will he get sick of it and go the other way, or is knowledge the best thing to pass on.

I remember growing up with little or no financial skills (It wasn't taught at school) and it took me a long time to wake up. I can see the benefit now of being good with your money and investing in property, even more so if I had of started young.

One thing I would like to do is get him his own rental when he is still at home, maybe sell him one of mine a bit cheaper then market value so he has a head start and at the same time learns the basics of owning a property and accepts the responsibilities of working to pay a mortgage.

My No: 1 Son had pocket money at 2 & half and made his own saving and spending decisions from that age

Bought his first property at 16 & half. Very financially astute. Very nice, too.

Daughter bought her first property at 18 & 4 months.

No: 2 Son bought his first on his 18th Birthday.

All are very proud of their achievements. Money sense is an ongoing state of mind and primarily comes from your own sense of self value

Cheers
Kristine

I think that the key element here is that our children will be exposed to investing in property and money management, whereas as a kid I was not. I always had an interest but did not understand how it worked until late.

My parents did not have a lot of money but were very frugal with what they did have and have retired OK, however never shared much of what they did financially with us (probably because it was simply about saving and making every dollar go as far as it could).

However they have always thought of investing in property or trading in shares to be risky.

We have 2 kids who are almost 7 and 5 and I will be (and have already started) telling them from a young age what we are doing with our money and properties. They then grow up with this, gain a good understanding and consider what we are trying to do normal, and (hopefully) can see that it works well!

We will also be supporting them when they are old enough to do the same. Hopefully we will be in a financial position to help them get a good start and not leave it as long as we did!

Depends on the kid. I have one who is completely oblivious to what goes on around her and only started doing jobs for money when I stopped telling her how much money she had ( I previously tallied it on the fridge).

Next kid along copies everything we do, for better or worse. Hasn't worked out money yet. I tried to buy something from her shop with cardboard money and she claimed she didn't have any and then gave me some of her money to buy something at another shop with

Wish more shop owners worked that way.

Older one has never been interested in playing shop, she spends her time in the land of unicorns and assassins and mummies and zombies. When she came home today she noticed the car was missing but didn't notice it parked 2 metres from its usual spot. And then didn't notice the huge pile of gravel where the car normally is ...

Is there any good finance books for children? Mine is 10 years old and would like her to be more financially literate as much as possible from a younger age.
Thanks.

Rich Dad, Poor Dad.

5 years old....?

late bloomer...?

jokes.

Kristine.. said:

My No: 1 Son had pocket money at 2 & half and made his own saving and spending decisions from that age

Bought his first property at 16 & half. Very financially astute. Very nice, too.

Daughter bought her first property at 18 & 4 months.

No: 2 Son bought his first on his 18th Birthday.

All are very proud of their achievements. Money sense is an ongoing state of mind and primarily comes from your own sense of self value

Cheers
Kristine

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Hi Kristine,

what you have said there is exactly what I want to achieve. You must be very proud.

Can I ask how did your son get a loan at 16 years? Did he have a good saving record, was he working? Hope I am not prying, just curious.

Mr. Fabulous said:

Rich Dad, Poor Dad.

Click to expand...

First book my son/daughter will ever read. Maybe a good bedtime story?

Hi everyone,

Get your kids to watch 'The Secret Millionaire's Club' - it is Warren Buffett's voice but in animation. Short 5 minute episodes on the web.

I am getting my 6 year old sister to watch - and although she doesn't yet care for money, at least she likes watching cartoons so does enjoy it.

i think its a bit like sex education... you should take some leads from your child on when they are ready, but try to initiate the discussion every now and again to see what their thoughts are
With our kids, we've taken a reasonably low key approach of providing opportunities to learn, through pocket money (linked with completion of chores), opportunities for generosity (so its not just all about them), delayed gratification (having to save money for computer games etc), savings (using some of pocket money for long term saving) etc
But I find their interest waxes and wanes, and I'm not too worried about that.

My colleagues daughter came to work one day when she was about 8 and told the MD of our company how her mummy borrowed money from her. He taught her about compound interest, and her mum made the mistake of saying if she could work out the interest, she could charge her...... the mum learned pretty quickly not to borrow money anymore (this is the same child who at 5 told me (as her mum's boss) that I didnt pay her mummy enough money!!... she's definitely one to keep home from the office!!!!!!)

Are they downloadable JWR?

Dan and nan said:

... how did your son get a loan at 16 years? Did he have a good saving record, was he working? ....

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Hi Dan

'Buying' is not the same as 'borrowing'

He bought the property Off The Plan, so he signed the Contract at 16 & half but didn't settle until he was about 18 & a bit.

He was working part time at Bi-Lo and for a number of reasons - which are a bit complicated to post here but not the least of which was that we received less than seven days notice of settlement - we used the family home as security and he refinanced this loan three years later when we wanted to do the same again for his Sister.

We had always provided serious pocket money for the children so that they got used to having 'plenty' of money and arranged for debit cards as soon as they attended secondary school. We did not tie allowances to 'chores' at home. Once set up, they never had to ask us for or explain what they did with their allowances. The day they turned 15 we turned off the allowance. They were then old enough to work so that's what they did, and we then moved the higher allowance down the sibling chain.

Start as young as possible. Allow your child a reasonable allowance and be clear what they are expected to pay for with this allowance.

We paid for all school expenses separately but they had to buy Birthday Party gifts from their allowance, their casual clothes, entertainment etc

They all know the value of a dollar and the future value of each dollar. They are all generous but frugal as well. Money habits are like hygiene habits. You can't expect a 21 year old to start washing their hands and adults don't suddenly develop a rational, balanced, money consciousness either

My daughter told me yesterday that she really appreciates her financial upbringing. Her two storey townhouse cost $136,000 in 1992 and since then, starving student though she was, the place is now worth at least $336,000 simply because what can you buy for that price?

So while she was at university her little investment has earned her about $200,000 and it hasn’t finished yet!

That purchase was certainly worth putting groceries in bags after school and at weekends. Be active with looking after the pennies and the pounds will simply grow when you're not looking

Hope this helps. We enjoy money in this household and it has been forbidden for anyone to say 'we can't afford that' or to speak of money in a negative way. We always try to speak of money in a positive way and if we want something, we find ways of achieving it. Money is a positive good in the world and the aim of the game is to be as wealthy as possible as young as possible.

And you don't get there by winning Tattslotto!

Good luck. We have really enjoyed raising financially literate children and they will have a lasting benefit from the little bit of pocket money (and all the associated conversations) which we made available to them

Cheers
Kristine

Kristine.. said:

He bought the property Off The Plan, so he signed the Contract at 16 & half but didn't settle until he was about 18 & a bit.

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And how is a minor legally allowed to enter into a binding contract?

With my 3 years old, I just managed to get the idea that we have PAY for items at the shopping center!

Also she has learnt to make her 'choices'. She is allowed to have only one item whenever we go shopping. She collects all Dora stuff but at the end she selects the one she really wants.

I also bought the fake money (they look very real though) and she knows she has to treat them with more care than any other toys. Even though she can count to 100 but I don't think she knows the value of it... for example I don't think she knows that $100 note is more valuable than $20 note.

My plan is to make her earn that fake money and then let her that equivalent at a shopping center. I think until they can count it is difficult to teach them about the value of money.

Dan and Nan,

Brilliant idea! You sound like a great parent. The world could use more of you.

I dont have kids (yet). However from the 'I was once a kid perspective', I know how valuable a solid understanding of finance can be to builiding a secure life.

When I was a small child my parents owned a construction related business and had three investment properties. Banking was different back then. It was not uncommon for my Dad to come home on a Friday with a briefcase of cash. He would sit me up at the dining table (on a pile yellow pages mind you just so I could see the top of the table lol) with rubber bands to count and bundle it. Then I would make the piles to pay each of the properties etc so my Mum could take it to the bank on Monday.

By the time my next younger sister came along the business had changed in that mainly larger non cash contracts dominated. My sister never got the chance to play with cash or understand finance like I did in my early childhood.

I believe it is evident in the way we now live our adult lives. Despite being on comparable incomes I have two properties and invest. My sister doesnt have a property, pays premium rent, buys cars, shoes and handbags. Then calls me asking for help with her tax bill. haha She often complains she doesnt understand finance like I do.

IMHO knowledge is one of the greatest gifts you can give someone. The second greatest gift would have to be a solid work ethic.

Redwing,

You can watch them on the website - just type the name into google - or there are some on youtube. There are other interactive things kids can learn from on the website - so a good overall tool for them to learn from.

At that age (5) they are like sponges and will happily soak up all this info - my suggestion is to try to make money matters a natural observation for them. See Mum paying the bills; see Dad making a reasoned choice to buy one luxury but forgo the other; see bank meetings; overhear frank discussions about retirement at the breakfast table.

The reason for this is that the problem comes when they head into teenager territory, anything that even smells of lecturing at that point will be rejected outright. It needs to become a natural "expected" and self-benefiting behaviour, like showering daily. A teenager understands that if they don't shower they'll have no friends. Similarly, it should be implicit that if they don't have their finances in order, they can't afford to go to parties or do cool things, ergo (by their own deduction) they'll have no friends.

Our 5 year old is learning about work + money in simple ways.

A friend told me that his daughter who is now 6 thinks that
1. money just comes out of an ATM
2. its pretty normal to have two overseas holidays a year

So she is earning stars for good behaviour and jobs around the house. We don't give her money for ordinary stuff that she's expected to do (though she does say to me that I make her work all the time ie for making her bed) At 20 stars, she gets a $.

So far, she has bought one ken doll (we discussed whether it was better to buy a new one or a secondhand one from ebay..she chose the ebay doll) and one annoying Dora mobile phone (we made her prioritise- did she want to pick something at the Sunday trash + treasure market or did she want to have a look at Kmart- we explained that she could only spend what she had.

The process didn't work with our 3.5 year old LOL he wanted now.

She understands that we work for money and money pays for things. Sometimes she doesn't get what she wants, at the time that she wants- it was an interesting tantrum to learn the experience of waiting (over a new set of thongs!)

My Dad was an economist and before I was 5 I was selling eggs from our chickens to the neighbours. He had me tallying up the cost of food and work out what the eggs had to sell for to make a profit. It didn't take long to transform me into a capitalist: I had my baby sister out doing the morning feed (which included breaking the ice over the water container in winter) within days and, believe me, she was on minimum wage. My mum bought and sold many properties while we were growing up and made good money.
BUT I have always been terrible with money. I could save well but it all went on travelling, partying etc. I really just assumed everything would work out, regardless of what I did (funnily enough, it has!).
Now I have two kids and I am finally interested in wealth and it's creation - and doing something about it.

So, I really think it depends on the kid - you can only try! My siblings are far more responsible with money than I am.

Cheers, Ali