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Home › Expert Q&A › Growth and Development › How can I start teaching my 5-year-old about money in a way he can understand?

Expert Q&A

 

By iParenting Staff
iParenting Staff Experts

How can I start teaching my 5-year-old about money in a way he can understand?

Teaching a 5-year-old about money is actually quite simple. First, remember to keep it real and concrete. Try taking your child to a bank and introducing him or her to some of the bank personnel. They are usually very willing to work with parents. Tell your child what each person does. Try to explain the purpose of the bank. Demonstrate how an ATM machine works, etc.

A 5-year-old is ready for an allowance. I have a few allowance suggestions. First, a child is paid an allowance for doing chores and for being a citizen of the family. Do not take away an allowance if a child does not perform his assigned tasks. Find another "goody" and take that away. Make sure you have told the child the punishment beforehand. Use an allowance to teach about tipping, tolls and taxes. Not all of the money should be for their complete discretion. For example, have part of your child's allowance pay for part of the family entertainment or for part of the family vacation. Let the child actually see the money and then have them voluntarily give back some of the money for the future event. An allowance should be split into immediate needs, long-term savings and "fun" money. Talk with your child and help them with the math to account for their money.

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