Dollars and Sense for Young Children

"If your kids don't get allowances, you are managing their money for them by deciding what they will buy and what they will do," says McCurrach. "Their role is salesperson and manipulator. Let them learn to manage their own money. Stop doing all the work. Total up the amount you are giving them now. Give that to them as an allowance and let them make their own decisions. You'll save money and avoid some of life's major battles."

Charity begins at home

Lisa Jordan, the author with Sheri Provost, of CashCow Kids: The Guide To Financial Freedom At Any Age says that preschool children also should learn that some of the money they receive from their parents can be earmarked for others. "Even a child as young as preschool age can learn about giving, saving, and spending. What we have done is that we have decided the best way to teach this age is to work it into your everyday life. It's a really natural thing to take advantage of these opportunities. We encourage our children to give at church or to the Salvation Army. Our kids make a Christmas list and a giving list. So we try to incorporate giving into our everyday lives," she says.

Save for a rainy day

In addition to spending and giving, children must also be taught how to save. Christine Edgar, of Seattle is trying to get her almost three-year-old daughter to save money, although her daughter may not realize the significance of that yet. "I just got Laura a cute green plastic piggy bank from Ikea, and she's fascinated by putting coins in it. I talk about what each of the coins is worth, and tell her that when we get enough money in there we can buy a little toy or a treat. I don't know if she gets what I'm saying, but she acts interested, and she likes playing with the piggy bank. It's a start."

Jordan says that use of visual aids made saving money a concrete concept for her kids. "If my children were saving for something that costs nine dollars, we would cut a picture of it into nine pieces. Every time they saved a dollar, they would get another piece," she says.

Whenever you begin teaching your child about money, you should realize that just because you've made mistakes in your financial past, your child is not condemned to repeating them. "Parents need to remember that they shouldn't go from one extreme or the other," says Jordan. "Some parents don't talk to their kids about money because they don't want them to be obsessed about it; on the other hand, some do want their kids to be obsessed with it. The purpose of teaching your child about finances is so they can learn to control money so that it will not have control over them."