Tips For Teaching Kids About Money: An Age-by-Age Guide for Scottie Savers

Trips to the credit union, store, or the ATM machine can be a perfect opening for a discussion with kids about how you use money.

"It's actually easy to teach kids about money," Jayne A. Pearl, an Amherst, MA-based author of Kids and Money: Giving Them the Savvy to Succeed Financially, tells Parents. "Turn your day-to-day activities into learning experiences." Trips to the bank or credit union, store, or the ATM machine, for instance, can be a perfect opening for a discussion about your values and how you use money. When children are very young, you can work money concepts into your child's imaginary games, like playing pretend store or restaurant.

Ages 2 and 3

A 2- or 3-year-old faced with a choice between a penny, dime, and nickel will almost always choose the nickel because of its size.  But while very young children won't fully understand the value of money, they can begin to learn the names of coins. One way to do this is to play the coin identification game. You and your child can trace around the outside of various coins and color in the shapes. Then invite your child to match the coin to the image while discussing each one's name. (Note: Toddlers may try to swallow coins, so always provide close supervision.)

Young kids love to play store, but an imaginary shop in the living room is more than just a fun way for your child to exercise their imagination. By exchanging play money for goods, your child begins to understand the basics of commerce.  Use toys, cereal boxes, fruit, sponges, or paper towels as store items. Together, make pretend money and shop till you drop.

Ages 4 and 5

Before heading to the supermarket, ask your preschooler to help you clip coupons. (Don't forget to use safety scissors.) When you're at the store, hand them the coupons and ask them to keep an eye out for the products. This will make them feel like they're helping, and it's an easy and fun way to talk about saving money.

Most preschoolers would rather play imaginary restaurant at home than go out for dinner. It playfully promotes a variety of skills, such as setting the table, learning good manners, and making change. Many 4-year-olds may have to be reminded after the pretend meal that they have to pay the bill, but once they understand the concept, they get very excited about paying with pretend money or making change as the cashier.

Ages 6 to 8

As soon as your child is receiving an allowance, he'll need a place to put his money. Make a trip to the credit union an event. Help your child open a savings account, and encourage them to make regular deposits. As the balance grows, you can discuss the concept of interest or dividends. This is also a good age to take up coin collecting as a hobby. (You can spark your child's interest with state quarters.) Visit the kids' section of the United States Mint Web site (www.usmint.gov/kids) with your child and learn about the evolution of U.S. currency. You'll also find online games and cartoons to keep your child engaged.

Ages 9 to 12

One way to teach comparison shopping is to read the store's price labels with your child, look at the size and price, and compare the bulk amount per cent. Don't forget to take quality into account. For example, one week, buy brand-name paper towels. The next week, try a generic brand. Then, discuss the differences and decide together if the brand name is worth the extra cost.  The all-American yard sale has you annually cleaning out your attic, garage, and child's closet. This year, put your child in charge. With some supervision, preteens may take to this project like ducks to water. They can handle much of the responsibility while learning about setting a value, making decisions, and helping you haggle with customers over prices.

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(Partially reprinted from parents.com.)