Teaching children to understand currency and be mindful of its value is an important life skill that merits being taught as an interactive and ongoing part of childhood.  While each child may absorb information differently from his or her peers, the overall concept of having conversations about money is the key.  Children can begin understanding the use of money and its value in toddlerhood through various age-appropriate toys and creative play.  It is through experiences such as pretending to buy plastic grocery items or mimicking a parent ordering a Starbucks latte that kids as young as 2 or 3 can begin to understand that items of necessity and value cost money.  This type of imaginative play teaches a child about the need for money in order to buy the things we need and want.

Piggy banks come in literally any design imaginable at this point, and not only are they the perfect gift to spice up the shelf, they are the first actual savings account that a child will typically recognize in his or her lifetime.  Earning money as a toddler can be exciting but should not break the bank for parents.  Small chores such as picking up toys or putting dirty clothes in the hamper may be expected, but a shiny quarter every now and then as a reward goes a long way to incentivize the repeated behavior.  As they get older, the excitement of stuffing a few dollars from the Tooth Fairy into the piggy bank is a feeling they will not soon forget.  Regardless of the age, I would recommend monitoring and not keeping more in a piggy bank than you or your child is willing to lose. The purpose of a piggy bank is to introduce a child to the way that money works while simultaneously teaching responsibility.  Allowing a child to purchase something with this money that is of perceived value not only supports the understanding of trading money for goods or services, but goes a long way in reinforcing the behavior of earning, saving, and responsibly spending money.

As a child reaches grade school age, the conversations and handling of dollars should change as he or she begins to understand in greater detail how money works.  Some parents may choose to play interactive board games if their children have the attention span, but I find that difficult having daughters with a large age gap.  For my children, we chose to use an educational app starting at the age of 6 as a useful way to involve our girls in transactions.  This type of platform allows for parents to have ultimate control over the money given and spent through individual debit cards that I keep in my wallet at all times.  I can choose for money to be transferred automatically for a weekly allowance or at my discretion.  I can increase or decrease based on tracked chores that are made visible on both my app and on my duaghters’ individual iPad.  Together, we designated specific percentage allocations to spendable, savings, and giving, so whenever a deposit is made, 70% goes to spendable, 20% to savings, and 10% to giving.  My goal for this year is to discuss and research individually which charity each child would like to support and make a special donation at the end of the year.  Not only does this teach positive habits, but it teaches compassion and kindness which are at the top of my list.

Missy Rench is a Financial Advisor with Benchmark Income GroupTM. Benchmark Income Group is collaborative and deeply knowledgeable, with integrity at its core. Working with this group has allowed Missy the opportunity to help others while focusing on and utilizing her financial, strategic, and interpersonal skill sets. “We offer a unique approach for each client based on individual goals, needs, and timelines. Being a part of this team has been exceptionally rewarding! Every day I get to connect, guide and inspire my clients, and by day’s end, I am fulfilled knowing that I have truly made a difference.”

Registered Representative and Investment Advisor Representative of and securities offered through OneAmerica Securities, Inc., a Registered Investment Advisor, Member FINRA, SIPC. Benchmark Income Group is not an affiliate of OneAmerica Securities and is not a broker dealer or Registered Investment Advisor. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.