How to teach financial responsibility to 5-8 year-olds

Learn more about teaching financial responsibility. 5-8 year-olds. Watch our free video for expert advice.
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How to teach financial responsibility to 5-8 year-olds

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The developmental tasks of a 5-8 year-old are really important, their early building stage and this is the time when you set the first values, you begin the first language and you have to defend against how cute and adorable that 5-8 year old child is, cause they gonna bully and manipulate you financially, just because they can. So, for example, what we know is 5-8 year old children, you know, heck, 3-10 year old children all really have invisible allowances. So, for example, if you buy Legos pieces every time you go out or if you're getting ready for a trip and you want to entertain them, you buy another set of Legos for them. In a way, that's part of an invisible allowance. One of the things you can do that begins to build early awareness is say to the child: "You know, we've got x numbers of dollars this month to spend on Legos, so let's make sure that we spend that money thoughtfully, when and where we want to". It's that way you begin to teach the value of money at a very early age, just by making them connect to something that has meaning to them, Legos, and giving them some boundaries for how much money is to spend. It does often sound pretty radical to families to say: "I'm going to give my kid $200 a month to spend on Legos", but the fact is, you're already doing that, and whether it's Legos or Happy Meals or polka dot dresses, whatever it is, use the child's interest to set a budget for whatever it is they are going to be purchasing. Now, if, at the end of the $200 they still want another $200 of Legos, you've got room now to say: "You know, we agreed, $200 is our budget for Legos this month." And what you've begun to do, is give the language of money, the word budget is there and you're making it clear what the limits are for what's available in the family for that particular want.

Learn more about teaching financial responsibility. 5-8 year-olds. Watch our free video for expert advice.

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Expert Bio

More from Expert

Joline Godfrey

CEO of Independent Means

Joline Godfrey is the CEO of Independent Means and the author of Raising Financially Fit Kids; Our Wildest Dreams: Women Making Money, Having Fun, Doing Good; No More Frogs To Kiss: 99 Ways to Give Economic Power to Girls; andTwenty $ecrets to Money and Independence: The DollarDiva’s Guide to Life.

A clinical social worker by training, at the beginning of her career, Godfrey was an executive of the Polaroid Corporation where she provided in-house family and therapeutic services to officers and employees. One of the first women in the nation to manage a spin-off from a Fortune 500 company, she launched Odysseum, a spin-off from Polaroid, and sold it in 1990. Odysseum was a creativity training company serving other Fortune 500 firms.

Godfrey is a graduate of the University of Maine and Boston University and was awarded an Honorary Degree in Business from Bentley College in 1995. She was a Kellogg Leadership Fellow and the recipient of the Leavey Award for Excellence, as well as the Beta Gamma Sigma Entrepreneurship Award.

Recognized in features for The Today Show, Oprah, Fortune, Business Week, The New York Times, and more, Ms. Godfrey is a frequent speaker and consultant worldwide. Godfrey grew up in a family business in Maine and lives in Ojai, CA.

More Parenting Videos from Joline Godfrey >
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