Teaching a Three-Year-Old About Money

I remember when I first heard Dave Ramsey talk about teaching kids about money. He said that age three was a good time to start, and he suggested giving kids a glass jar to use as a bank so they could see their money accumulate. It sounded brilliant at the time, but I had no idea how much a three-year-old would understand.

When Brennan turned three in March and I was pregnant, we found a perfect first opportunity to teach our son about the value of money and the joy of giving.  We were wandering Babies R Us one day, and Brennan wanted to buy everything he saw for the new baby.  I explained that we needed money to buy things, and I asked Brennan if he would like to save some money of his own to buy his new sibling a present.  He loved the idea.

Over the following several months, we sought opportunities to "pay" Brennan for his hard work. He did not have official chores, as we both feel he is still a bit too young. Rather, we found times when he was a really hard worker, cheerful giver, big helper, etc., and rewarded him with a dollar or some change for his jar.  We did this very intermittently and unexpectedly so he would not learn to manipulate us or require payment for good behavior.  (When he is older and has official jobs around the house, he will receive regular payments; it just didn't seem appropriate yet.)  Each time he was given money, Brennan put it in a small glass jar.  Jim and I wrinkled up dollar bills to make the jar look more full, and Brennan was so excited to see his money grow. We talked regularly about the fact that he was going to use the money to buy his baby sister a Birth Day present, and we reviewed the kinds of things babies like and need.

After months of saving, we went shopping for the big present.  We counted Brennan's money before we left the house and put it in an envelope.  We discussed the fact that he had about $11, so he couldn't spend more than that.  Then, we headed to Babies R Us.  As soon as we got in the door, Brennan started grabbing things.  He wanted to buy his sister cute socks, a pair of shoes, a sweater...  (Jim says he spends too much time alone with Mommy!)  Items that were too expensive were left on the shelves, but things that were an option got tossed into the shopping cart.  I carefully reminded Brennan before we went in to the store - and numerous times while we were shopping - that we weren't buying everything, but we would look at a few things and then make a final decision at the end.  It didn't take long before he started getting choosier.  After the first reminder, he saw a pair of pink shoes he liked better than the brown ones he had put in the cart, so he took the brown ones out and put them back on the rack by himself.  He started thinking things through better, too.  At one point I asked him, "Do you think your baby sister would like that?" and he said, "No, I don't think she would," while hanging it back on the rack.  (Later, after reconsidering, he went back for that item, and I could tell he had really thought about it.)  When he had about eight items in the basket, I decided to stop the process. (He's only three, and we didn't need to narrow down a cartful!)  I laid all of the items out and asked him what we should buy.  He was adamant about buying a toy camera, which was on sale for $3 (Hooray! He's already frugal!), so that left about $8 he could still spend.  I showed him which items we could still afford, and he immediately chose a small pink pretend cell phone.

We returned the items we weren't going to buy and proceded to the front of the store.  Brennan insisted that he would hand the items to the cashier, and he counted out his dollar bills himself (thankfully no one was in line, because the clerk wasn't as into the lesson as we were).  I handed Brennan his bag with purchases totaling just under $11, and he left the store, beaming.  We talked about the fact that he had worked hard for the money and used it to help someone else, and Jim and I each praised him like crazy for his generosity.

When I told Brennan that I was going to take a picture of him with his gifts, he was a total ham.  He is so proud, and it will be a lot of fun when he gives the presents to his sister.   He is only three and a half, but already this little lesson has taught him  - on an appropriate level - about selflessness and giving, saving, the value of a dollar, buying things you can afford, and work. We will definitely have to start filling the jar again for Christmas... and it's probably time to start talking soon about having separate jars for giving, saving, and spending!  What a blessing to be able to teach a toddler lessons that are hard even for adults to learn!