Setting goals for each of the money choices is key to feeling a sense of accomplishment for anyone at any age. But this is especially evident in young children. At ages 5 and 6, your children can and should learn the concept of saving. In Silver Spoon Kids, Eileen Gallo, Ph.D. indicates that around age three, children start to develop the ability to think logically and begin to connect concepts. They make connections in a very literal manner. We can take advantage of that literalness to teach children at this age the concept of saving. But how?

First, I recommend converting all money you give your child or that they receive into coins for a time. Coins give children more to make decisions with. Using the accumulation of coins as a visual lesson they eventually connect to the concept of saving. As a child accumulates coins and begins to see them build into larger and larger quantities, they begin to relish the accumulation concept. Coins first — dollars next!

Then, establish a time frame for taking money out — maybe once a week at a certain time and place. Open a savings account at a big bank to help your child understand and cope with the delay in getting at the money they save. Eventually the time to “take money out” will be associated with the trip to the bank and it will get easier for them to manage. Also, as they “spend”, they begin to make the connection between giving money and getting something back in return, a concept Gallo tells us that most preschoolers can grasp.

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