How to Teach Toddlers about Money

We go to Target a lot! I mean a lot! What else are you supposed to do with toddlers to kill time? And every time we go, Leo wants a toy. Most of the time we say no, and he can only look at them. But recently, we've found ourselves saying yes more and more. Daniel and I decided that he needs to learn what these toys cost, and that you have to earn money to buy them.

Dave Ramsey has a great book called Financial Peace. He has some practical lessons about how he taught his kids about money. I'm trying to implement some of his ideas into what we do with Leo.

1. Clear piggy bank The idea behind the clear piggy bank is that you can see the money building over time. It motivates kids to keep earning money. A clear jar would do the trick, but I just couldn’t resist this little elephant bank. I probably need to read Financial Peace again ...

2. Chores vs daily activities I don’t want Leo to get paid for everything he does around the house. Some things are just built-in with getting to live for free. Picking up toys in the playroom, cleaning off your plate after dinner, and cleaning up the bath toys after bath time are all daily requirements. But, if he helps put up dishes, pick up sticks in the yard, or put up his laundry I will pay him. We’re talking quarters.

3. Make it tangible Once he earns enough money, we will take him to the store and let him pick something out. I want to let him physically hand the money to the cashier. He will see the money is gone, and if he wants to buy more he will have to earn more.

4. Delayed gratification Leo wants pretty much every Hulk or Paw Patrol toy he sees. But I want to teach him that if he spends $5 to buy a Paw Patrol stuffed animal, he won’t be able to buy that $10 hulk toy he’s been wanting. That way he can teach himself to say no and save for what he really wants.

I plan to teach Leo about giving and saving soon. I think that’s the most important thing to learn. But right now I am focused on him learning the connection between working, earning money, and buying things.