How to Teach Small Children About Money

Monica has started her 4-year-old on a chore chart. She has his envelope system set up but has trouble helping him distinguish between saving and spending. How can she do that?

QUESTION: Monica in Illinois has started her 4-year-old on a chore chart. She has his envelope system set up but has trouble helping him distinguish between saving and spending. How can she do that? Dave and Rachel offer some insight as to how they did things in the Ramsey house.

ANSWER: Rachel: At this age, your savings jar, if you will, is really a long-term spend plan because at that age what you’re doing is you’re teaching them delayed gratification.

Dave: When you’re 4 years old, two weeks is a long term.

Rachel: Right. So the spend jar is kind of spontaneous. If they have that with them and they’re at the grocery store and they want a pack of gum or whatever, they can just spend that. You don’t really have to think twice about that. But your save jar is your long-term spend jar. They’re not going to be saving up for—

Dave: The big Lego set.

Rachel: Yes, because even with us as teenagers, we were saving for a car at 16, so our “savings envelope” was really going towards a car that we were eventually going to spend.

Dave: But that wasn’t at 4.

Rachel: No, it wasn’t at 4, but I’m saying even as a teenager, you’re up against that.

Dave: We kicked in the matching savings at about 7 or 8.

Rachel: I’d say a little older.

Dave: Well, 7 or 8 for Daniel, and more like 10 or 11 for Denise. The youngest got an earlier start because we started figuring out what we were doing. You don’t want to force a 5-year-old or a 4-year-old to have to think 10 years out in the future. Really, all your save jar is when you’re 4 is a glorified spend jar. That’s what it amounts to.

Lots of grace. We’re just trying to teach lessons here. It doesn’t have to be done perfectly. There’s no exact rule book, but just be intentional.

Jump-Start Your Goals!

Jump-Start Your Goals!

Get our 8-Day JUMP START series and weekly newsletter that are packed with articles and tools to help you win with money.

Reach Your Money Goals

Reach Your Money Goals

Start with a budget. Join the millions already budgeting with EveryDollar!

Create My (FREE) Budget

Thank You!

Your 8-Day Jump Start is on its way to !