Our eldest daughter reached a milestone year (5) where she is no longer a baby. We decided to start teaching her financial responsibility. Here are some of the ways we are teaching our 5 year old financial literacy:
1. Open an Account
Now that she is five - she is old enough to have her own account. She proudly signed her name and received a piggy bank as a gift. I had shopped around online first to find a local credit union with the best rewards for 5 year olds. There were banks that simply had accounts and those that offered kids incentives for banking with them. The one we chose gives toy store dollars after the child has made a number of deposits.
2. Money Apps
Our daughter loves brightly colored and interactive games online -- so apps are the perfect tool to introduce money concepts. We downloaded a couple that teach her to count money. They also have more advance apps for kids that teach saving, managing dollars, investing, etc.
3. Purchasing Power
At the dollar store the little money she has goes a long way. Since everything is a dollar (a round number) it's easier for her to add her purchases (although tax, another important concept, is also added to the price). Our daughter loves going there because she is able to buy things for herself and others. From my perspective, it felt good to see our daughter confidentially purchase items for herself and others. She was also really proud that she purchased items with her own money and could provide for others too.
4. Earning Money
We have not set up a system for her to get a steady income (she has yet to do her chores) so I give her a dollar for odd jobs like vacuuming the car or sweeping the floor. I don't want to force ideas on her, hopefully she will come up with her own ways of earning money.
5. Familiarity with credit unions & banks
I'm not a person that believes in putting all my money in banks. My goal is to introduce our children so that they are aware of these institutions and how they work. The more she visits the bank, the more familiar she will become with them.
6. Financial Planning
Our daughters financial plan is to "buy a lot of toys." And she shrugs her shoulders when I ask her what she will do once it runs out. I don't expect her to have a profound retirement plan at 5, I just want to start the conversation and know she is thinking about her financial future.
7. Be An Example
My daughter has been a major influence on why I give more people on the street money. She has taught me it isn't something you hoard, even if you have a little - it's a resource and a blessing we happily share with others no matter the circumstance. I know she watches how both her parents spend and invest our monies. I am not an economics expert, but I do expect our children to learn from our financial decisions and make wiser ones.
In the end, I want our children to experience financial wealth and not be taught it. I want her to enjoy money, share her money and be intentional about investing her smart-earned money.
Until next time...
Peace & Love,
Dominique