At this age, most children are able to understand that money can be used in different ways. Now’s a great time to teach your child about saving, spending, and giving. You can create three jars and label them “save,” “spend,” and “give.” When your child receives or earns money, help him or her divide the money into those three jars. Establish early on whether money should be divided evenly (which is easiest to compute), or in some other fashion (e.g., 10% to spending), and be prepared to make change to enable your child to divide his or her earnings accordingly. Research a cause that you and your child would like to support with the “give” money, and be clear about what your child is “saving” for (e.g., college, summer camp, etc.). The “spend” category is for your child’s discretionary spending, and you will quickly see whether your child enjoys watching his or her spending money grow over time, or whether your child likes to spend as soon as he or she receives it. Discuss the pros and cons of waiting for something that is really desired versus spending on smaller items immediately.
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