Question: I read "Kiplinger's" every month and love your column. You are doing a great service for parents in helping us teach finances to our children. My question: How can I begin teaching my 2 1/2-year-old son about money? My goal is to give him a strong financial background for adulthood.
Answer: Thanks for the kind words — and thanks also, on your son's behalf, for taking such an interest in his financial education. That alone means he's off to a great start.
Having said that, let me also add a word of caution: Go slowly. Far from pushing children to grow up too fast, financially or otherwise, I consider myself a pulling parent, keeping kids young as long as possible. Don't try to do too much too soon. Keep it simple, and make it fun.
Bear in mind that preschoolers think in very concrete terms. Let a group of 3-year-olds choose between a nickel and a dime, and they'll almost always pick the nickel because it's bigger.
Assuming your son no longer puts coins in his mouth, let him play with them — sorting, stacking, saving. Talk about who — or what — is pictured on "heads" and "tails." Start collecting state quarters. Buy a fun savings bank — one that lets your son take coins out as well as put them in.
Let him make small purchases — at a dollar store, for example. Help him count out the money and give it to the salesclerk, and then count out any change you get back. Let him put coins in a vending machine and scoop out the change.
When he's old enough to start asking questions or making observations about things that touch on financial issues, take advantage of everyday situations to give him honest, age-appropriate answers.
For example, when he begs to press the buttons on the ATM, tell him how the money got there in the first place. Hint: "The bank is a big piggy bank for Mom and Dad." A visit to your workplace opens the door to a discussion about where Mom and Dad get their money.
Once your son is old enough, try playing a money-oriented board game — such as Shopping Spree, www.intplay.com, in which players age 4 and up move around the board making purchases from different stores.
Don't expect too much. If your son knows at this age that money can be exchanged for other things, you've laid a solid foundation.
Have a question about kids and finances for Dr. Tightwad? Write to Dr. T at 1729 H St., N.W., Washington, D.C. 20006. Or send the good doctor an e-mail message (and any other questions for this column) to email@example.com.