Young children are probably not old enough to understand the importance of setting aside money for retirement, but this does not mean that they are not old enough to understand how money works.

If fact, your young kids can get a better grasp on some financial principles than you probably realize.

Recently, two of our boys (ages 7 and 4) each asked if they could get a particular Wii game. Our 7-year old wanted a football game, and our 4-year wanted a soccer game. Both cost around $18.

My wife and I decided to take advantage of this opportunity to teach them about money. We gave them a list of chores that they could (not required) do each week. Every completed chore was worth $0.25. So it was a cost effective proposal for us as well.

Now, each boy had a financial goal ($18) and a way to reach the goal (chores).

Here is why we were happy for our kids to pursue a financial goal, like being able to purchase a Wii game:

1. They learn that money does not grow on trees. They quickly realize that the money they need to purchase the game doesn’t magically appear just because they desire it. There is no money tree.


2. They learn that money is earned. They understand that in order to receive money, they must work. Money is an outcome of effort.


3. They learn to save. They begin to understand that the only way they can reach their goal is to set aside their earned money for the future, also known as saving.


4. They learn delayed gratification. This goes hand in hand with the point above. The ability to wait continues to diminish in our culture. From a financial perspective, the lack of patience and self-control leads to devastating financial consequences, like significant debt. Children will not learn delayed gratification by observing the culture. It must be taught.


5. They learn what it feels like to buy something with earned money. Not only do they feel the accomplishment of reaching a goal, they feel the weight of responsibility to take care of the purchased item. They worked hard for it. And they don’t want it destroyed.

So, as a parent, here is what you can do. It is really simple.

Help them identify a financial goal. Encourage them to find something they would like to purchase. Make sure the amount is attainable but still takes effort and patience to reach.

Provide them a way to reach the goal. We decided that chores would be the best way to earn money. It’s the one that I most recommend. Help them see the path they must take to attain their financial goal.

Parents can leverage financial goals to teach their children about important financial principles. Help your child identify a financial goal, and along the way, discuss the principles they are learning.


Written by Art Rainer, member of the Summit Stewardship and Generosity Ministry Leadership Team.

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