Teaching My Three Year Old About Money: Saving

As I noted in the previous post, my daughter is starting to develop a concept of money. She understands that you spend money to get things and that there are different amounts of money. She also understands that you need more money to pay for some things than others. As I’ve written, I’ve started developing a strategy for teaching her about spending habits – that you need to consider your purchase carefully and fully comprehend that once you buy something, you have less money to use to buy something else.

This weekend, a family friend gave our daughter a homemade wallet which was crafted out of duct tape. My daughter was thrilled! The first thing she said was that she needed a purse to put it into. The second thing she said was that she needed money to put in it. My husband gladly pulled a dollar out of his wallet and put it in hers. She immediately turned to me gleefully and said, “Mommy, can we go to the museum tomorrow so I can buy something else?” (the local children’s museum is where she made her first purchase).

I realized this, too, was a teachable moment. I responded, “Yes, sure, if you want to we can do that – we can go to the museum and spend your dollar, if you want.” “YAY!!!,” was her response. I continued, “However, if you want, you might consider putting your dollar into your piggy bank. If you put your dollar into the piggy bank, then every day it stays there, you’ll get a new penny.”

We had to review the logic of this several times. Up until this moment, I don’t think she was aware she had a piggy bank. I took the beautiful Eastern European clay painted pig down from a shelf in the living room and showed it to her. I explained that when we save our money in a bank, we get more money. After a review of the situation, she decided, at least for the night, to put her dollar in the piggy bank. I made a big deal of congratulating her on a great decision and showed her how to fold the dollar to fit in the slot.

The subject of the dollar has come up a few times and I’ve reminded her about the pennies. I put a penny in every day, but I usually do it at night. I don’t want her to think it’s like the tooth fairy or anything else magical, just that it’s not about money coming from Mommy and Daddy. I want her to understand that this is just what happens when you save your money – you get more.

Sometime down the road she’ll remember the dollar and decide she wants to buy something and I think that’s great. I just hope enough time will have gone by for there to be a meaningful amount of pennies in the bank so when we withdraw the dollar, she can see that her money has grown!

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Teaching My Three Year Old About Money: Spending

The subject of money has recently come up for my daughter. A while back, she got a hold of a dollar bill. I think we were headed to a special event and I gave her the dollar so she could buy whatever treat she wanted, as long as she could afford it. Obviously she doesn’t understand the value of a dollar, but, as the day progressed, she forgot all about the dollar in her pocket and she never spent it.

Fast forward six months and she came across her dollar in her bedside table drawer. We were headed to a children’s museum and she decided she wanted to buy something. I thought it would be a great lesson for her. After we were done with the museum, we went into the gift shop and perused the aisles of small tchackis. She was tempted by many things, but almost all of them cost more than a dollar – $1.50 $1.25, etc. I just kept explaining to her that she didn’t have enough money and we kept looking for things that did cost a dollar. Finally we discovered a small rubber duck, some stickers and a miniature watercolor paint set. She carefully chose the paint set. I reminded her that once she paid for it, she would have the paint set, but wouldn’t have the dollar. Was she sure she wanted to do that?

After much thought, she determined that she wanted the paint set. I congratulated her on a great purchase and assured her she’d love painting with it (to keep the lesson simple, I paid for the tax). As soon as we got in the car she told me she wanted another dollar and I told her that wasn’t how it worked – she only got money on special occasions. A few times since this incident, she’s asked for money and asked me to buy unnecessary toys. I’ve reminded her that we don’t have the money for things like that right now, but when she has some money she can choose how to spend it.

I don’t mean to be draconian with her, but I want to inculcate her to an understanding of the seriousness of money early on. Soon enough she’ll be surrounded by peers with their own fluid grasps of how money works so, while I’ve got her mostly to myself I want to instill these values.

She loves her paint set and she’s quite proud of it.

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