#248 – Money Skills for Kids Ages 5-8

Hey, money boss parents. Anna Sergunina is here, and welcome back to the Money Boss Parent Podcast. Today, I want to spend some time talking to you about financial literacy for kids ages as early as 555, to eight, something is personally happening in my life, and it kind of prompted me to gather resources, ideas, thoughts for myself, to kind of start really digging into this journey of teaching my son, Liam, who's just about to start kindergarten this month, when I'm recording this podcast, and I really started to give it a lot more thought as to what practical things will I will be implementing now, and have already started. So I think you would love to hear some of these ideas. And also, I have a really awesome book suggestion for you, where, if you have kids that are outside of these age this age bracket right now that I'm talking about, you can actually have the book give you the guidance, because I love the book for for that reason is that it gives you these age phases where you can start To introduce these financial concepts, because as kids grow older, there's more understanding, there's more development and so forth. The book that I'm referring to is called Raising financially fit kids by Jolene Guthrie, and I love it because it outlines really specific activities for each of these age groups, tasks, concepts and actions you can introduce as early as age five. And I've been really waiting to start on it, because I think a lot happens for kids right as six months go by, as a year go by, especially when they're so little. And I really wanted Liam to get, like a good group on these numbers, because it's hard to introduce some of these concepts right with money, where they're quite not, you know, counting the numbers, or even just know their basic numbers and so forth. So this is a perfect time in my life and my family where I am excited to really start digging into so I want to go through some ideas with you today and share what I'm going to be implementing personally. Hopefully this will help you get started with some you don't have to do them all, maybe pick one or two or three. I kind of experiment with this next school year if you have kids that are similar to my son's age. So let's dive into it. The first kind of area where I think everyone can start to kind of get their toes wet would be starting with the basic concepts, basic money concepts, right? This is some of the simple things that you can start to introduce to your kids. And it doesn't have to be anything grand. It could be, you know, just tangible ideas, maybe explaining to your kids, why do you have a wallet? Or what does a piggy bank do? Actually interesting enough a side note. Liam asked me the other day, what's the purpose of a piggy bank, and I really had to pause and come up with an answer of, like, what do you do, right? Like, and so my explanation was, well, when you are going to be a grown up, you're not going to have a piggy bank. And it happened that we were driving in the car, and he asked me that question, and we were passing a bank, so I just pointed to the bank and said, Look at this building right do you see a sign on it? I forget what it was. I think it was Chase. This is a big piggy bank. A lot of grown ups are putting their money in there right now. You have your own piggy bank that you can control and you can play with. You can take money out, you can put them back in. And so it was just contrasting and comparing, right? But I had to be, I had to come up with something on the spot for that. So basic money concepts doesn't have to be anything crazy, but here's what I am doing currently with my son, tooth fairy money. We started losing teeth kind of early. So another story to I did not expect this just yet, especially not like when your son turns five. I was really thinking that this would be more like six or seven. But anyway, this was not up to me. So as soon as he lot lost his first tooth, we had to do the whole tooth fairy process right? And because Tooth Fairy does come and bring money, so we had to start thinking about, what is he going to do with this money? And this is, this been interesting. So far as of right now, we have lost four teeth, and he's about, I think, close to, like, $60 and. In his little piggy bank of all the Tooth Fairy money. I know you might ask this quite a bit for four teeth, but anyway, grandparents added a few, a few dollars. One was a traumatic loss, so we had to, like kind of beef that up with a few extra dollars. But a side note, an ongoing rate for a tooth these days is $7.09 and this is like, if you remember, from the from your days, you get, like, 50 cents or dollar, my friends, inflation is has been really playing here a big, a big part. So we are continuing to the tooth fairy story. He still likes it. He's still interested. I continue reading books to him about it, but that's that's ongoing, and as long as he really believes it and willing to play along, I'm gonna continue doing that. Next in this section would be and these are the things we've already had. I just really had to think about it, we have a cash register. It's like a, you know, a toy cash register that has fake money. And so we play various, you know, games where, you know, maybe it's a store, and he has all these toys lined up, and I'm the customer, and he's the cashier and so, and he has a little scanner. Until we do all of that, he punches numbers and checks me out for all the things that I buy. We also found, and this is in the toy store, a kid's wallet. I mean, it's, it looks like a regular wallet, but it's, you know, it's made up with the, you know, fun colors, and it has money inside too, so like dollars and coins, obviously, all fake credit cards, like a little driver's license. So we use that at the same time, right? Is that we play, you know, play these, these games where he gets to practice. Now, he does see me do these things on a daily basis when we go to the store or the gas station, you know, he, he and I started giving him more authority in terms of, here's my credit card, you you know, put that into the machine, or you attach, you know, scan the little chip and see. So he kind of takes more authority of that. But these are basic things, because he can see what I'm doing and how I'm applying these things. If we want to think of moving on to the next level, is, would be like establishing the habits of, okay, you've got these Tooth Fairy monies, right? What are we doing with them? How are we going to be saving them? Because I'm starting to introduce this idea of saving, spending and giving. I've only just literally started talking about it more with him, and if I asked him question a few times, like, when we were at a toy store and he's trying to pick something, and I had a really good idea of, like, Okay, you the Tooth Fairy gave you, like, $8 for your tooth and this toy is 15. Would you want to spend all of your tooth fairy money to bit to buy this one toy? So, like, kind of comparing, contrasting with him. But idea of introducing the three jars, the spend, save and give, is a really appropriate age right now, I'll include some links for you in the show notes. Of you can just buy these jars on Amazon and put colorful labels and just every time you know if the Tooth Fairy comes or if your family starts to introduce allowances, which we'll talk in a bit, or pay for chores that could be one place to put the money in as well. Not quite investing piece. But I, like, I've also done, like, why he's gotten so much money with his tooth fairy, or with the teeth situation is, like I said, Okay, if you don't spend the money, I'm gonna, you know, give you a few extra dollars, so trying to introduce this idea of matching or like, having more money or money growing. So that's been really working. Well, one thing that I think I can improve on, or we can improve on as a family, would be really having proactive conversations about, what are your family views on money like, you know, how do you, you know, what do you value money for? Why do you work for the money where? You know, where and how do we spend the money? Again, with these, you know, with the kids in this age group, it's, it's again, very basic, but we talk about saving money for vacations and trips. We just came back from a really nice vacation in Hawaii, and I've been explaining to him the whole time, like, this is, this is our big trip for the year. This is why we're doing it and all of that stuff. And so it was funny as we were leaving, getting on the plane, and, you know, kind of saying our things and appreciation and all the fun stuff we did and how much fun we had. It's like, okay, we're gonna fly home now.

We need to go to school, go to work so we can make more money, so that we can come back. So made me feel really good, because it was like, okay, he's getting it. It's working like, it's these things at his level are sinking in. However. Her, I want to be more proactive about it in terms of, like, Okay, what do we value together as a family? And you're not actually talked about this, but maybe even coming up with, like, something really short and sweet and like, make a little plaque and say, like, money means this to us. To us, this is what we spend money on, or this is what we don't spend money on or so so that it could be, you know, displayed somewhere in the house, and used to remind us, why are we doing these things? So I am interested in this topic. I need, we need to think about it more. Because I think these the behavior is what's gonna what you doing is what's gonna have the most influence on what what they learn, because it's amazing. As you know, parents on the other side of this podcast, you're going through the same situation in life phases I am. You kind of see yourself what happens with kids as they learn through experiences. Now we've been playing a lot of fun games that involve money and Liam loves Monopoly game. Oh, my God, that's, like, one of the favorite ones so far. When we started, like, maybe eight or nine months ago, it was challenging. He would have fits because he wanted to win all the time. He didn't quite get how the game works. He wanted to have all the dollars. This is like the kid version monopoly. And he wanted to have the most dollars versus, like, having the most buildings. And so we, we had a rough start, and it took some time. We didn't even, like, for a while, we even put the game away. And he was like, I'm not interested. I don't want to lose and all of that stuff. But he came around. He especially when grandparents come there's like, you can have four players. Oh my gosh, he's, he's after that. So that's an easy one to to start. I picked up a few other ones, like at the library, but I'm sure if you go on Amazon and, kind of, you know, search in the same category, there's, there's probably a few more. Again, I mentioned this already, but playing, playing a store, using this cash register and, like the concept of, you know, trading money for things and so forth. And another idea. Now, this is something that I have not gotten my hands on, but we've had kids on our neighborhood do is set up a lemonade stand, and he saw we had a few kids come by this summer, knock on our door with, like, a little pitcher and a few cups, and they were selling, like, I think it was $5 like, remember when the lemon it used to be $25.25 anyway? Well, I was happy to pay the $5 but he was, Liam was home with me as well. Like, okay, do you see what? What is happening? Like, how these kids got the lemons? And so he ran out. We have a lemon tree in our front yard. So he ran out just like, do we have any lemons? And right now, it's not the seasons for the lemons, but I think we don't. But he's like, Well, when we do have lemons on the lemon tree, we're gonna get them and get the sugar and water and set up our own lemonade stand. So that's the plan. It's not gonna happen until a tree gives fruits like in December, January. So more to come on that. But it's a really awesome idea, because you see other families doing that. You see kids having little lemonade stands in the park, or selling cupcakes or whatever it is like. Be creative with this. Let them be involved in the process. Next, I want to talk about, kind of going back to this previous discussion about family values, like, what are the creative ways you can have the conversations about money. Now we'll talk about in a minute, what are you doing for allowances or paying for chores? But I feel like, if you're a family who does have an allowance, and maybe Sundays when you give that allowance, maybe at the same time, you can have this like family meeting to talk about, okay, here's and this is all the kids level right now. Yuri and I have been having money dates for years, and this is kind of like our, you know, quote, unquote family meeting. But if you want the kids to be involved, and you don't have to share your all of your finances with them. But simple things like, Okay, here's, you know, what we need to buy for groceries today. Like, talk about items, what the items cost when we go to the store, you know, I have him look at the at the labels and say, Okay, how much does this item cost? How many do we need? And so forth. So, like, think about some of these basic things that could be just a conversation, nothing, nothing formal, but more of a habit. Now, if you are a family who has interest in setting up an allowance, one rule of thumb, and I've have a few, a few other episodes to help you kind of get your head wrapped around this topic, chores, paying for chores and giving kids allowances for allowances, maybe like a starting point for someone who's five years old would be, like paying them or not paying them. I misspoke, it's not paying them, giving them $5 per week. And so that's kind of like an easy track. Tracking mechanism because they're five years old, you give them five $5 next year, they're going to be six years old, you're going to give them $6 now. A really interesting quote from this book that I mentioned earlier, raising financially fit kids by Jolene Godfrey. I love this quote about allowance, and she says allowance is not an entitlement or a salary. It's a tool for teaching children how to manage money. I love that, because I feel like I've always kind of struggled with this concept of allowance and and also like the struggle more of like, okay, do you give an allowance? So do you just pay them for the chores? And so I've sort of settled my mind on the fact that Okay, so right now where you know he does, he can do some chores, chores, and we haven't quite gotten to that, to that structure yet. I feel like this might be like a layer on the top of allowance. But if I want him to start to kind of have more real experiences with money, having an allowance would be a really neat idea to start, but it's not. It's not because he's entitled. It's really, I, that's why I love this quote. It's really a tool to help us teach him the values of money and how it works. So as you're deciding to implement that again, it kind of goes hand in hand with the three jars. Because if he does get $5 he or she, if you have a daughter, what are they gonna do with it? Right? So it's almost like starting a few few of these things at the same time. But try it, try it for for some time and see you know how that goes for your family. And then, of course, like a layer to that as well. But I've run into this a few times is like, how do we say for how do we start setting goals? I love this concept of setting goals. I am a goals based financial planner. Have this is sort of the angle that I've used with clients for like, almost 20 years. Like, it's really hard to create a plan, a financial plan if you don't have goals. And we start with like, what are you trying to accomplish? And so I really like to think this idea and these young minds is that you got to think big, right? And as you doing all of these things, getting your allowances, losing your teeth, or having a lemonade stand, and, you know, whatever it is, like,

let's think bigger. And where this came from me was like, you know, we're at the toy store, and Liam wants to, you know, a toy again, or some, some other stuff, and he can't pick and so I would kind of like throw out and say, oh, you know, put this on the list. He gets frustrated, and he says, I don't want to put this on any list. This is not fair. I'm like, Well, you don't get, you know, toys just because it's, you know, regular Saturday. We need to think about your birthday is coming up. So put it on that list, Christmas is coming up, or some, you know, whatever event you want to tie this in. And so he does kind of come back at me and say, well, that Christmas is not for, like, six more months and long time ago or away. And so regardless, I right now this is just a concept that's sinking in and really working on this value of delayed gratification. Okay. I mean, come on, we're adults here. We know what that's like and a simple way of like, okay, here's a list. What I started doing to make it more tangible is that I have just a Notes app on my phone, and I named it Liam's list. And I just wanted it to be real for him. I didn't want just to say, put it on the list. He was like, what list are you talking about? So I have a list on my phone, and I just write it down. It just he gives me the name of the toy, and I just type it, will I remember it? I don't know. I probably will. Some of them, I've taken pictures, but I want him to think about that. He's asked me occasionally to show him that list, because it had pictures he's not reading yet. But still again, he's like when he's in this moment of like, overwhelm and having to make a decision at a toy store because he just, like, wants to buy something, this is a really, really useful tool. So think about that, setting setting goals for the long term, and that's kind of it for right now. And I know it's it's quite a few things, but I feel like I'm in the good spot. All of them sort of fitting in with each other. I'm gonna unveil the jars and the whole set so we have the piggy bank with with the tooth fairy money, and that's all kind of like just sitting on the sidelines. But I want to have a more proactive practice of him kind of coming in contact with money, I feel like it's still it's he gets the idea it's there, but it's like it's not quite clicking yet. And so we'll see this is just the beginning. And I'll you know as I test out these strategies and tools, and I'll share my experiences, that is it, if I. Folds, because it's going to be interesting. But I highly recommend for you to consider getting this book either from the library or finding on Amazon. And I'll include a link which will help you kind of, sort of plan ahead. They have checklists and charts you can use, and also, kind of like, look ahead, like I was reading the section of you know, when the kids to be teenagers, like, I think age 13 to 18, you can start talking to them about setting up an investment club. So it's like building these concepts on the top of you know, what they learn as early as age five. So that's it, my friends. I am excited about this because I feel like it's finally kind of coming together for my family, but I know that you're gonna love these ideas. I know you're gonna try these. Let me know what you are doing, maybe something different. Share this with a friend who has kids in this age group. I always appreciate you spreading the word. Also, if you haven't left me a review yet. I would love to hear what you think. Maybe there's ideas of topics or thoughts you have how I can improve or do better. This is really, truly a passion project and things that I love to talk about. So thank you so much for giving me your undivided attention until next time, remember, you are the boss of your own money. You.