It really is never to early to start educating your children about money. Like anything, however, it does require effort.
From the piggy bank to the savings account and beyond, applying the experience of saving and growing money is best taught from the outset.
It is a wonderful thrill for a child to feel the weight of the gathering nickels, dimes, quarters, "loonies" and "toonies" in a container of some sort and to understand that if you spend that money it is no longer there (especially if the item purchased is consumed and no longer provides utility). But, if you save it, there are some really powerful feelings that come with the continuing growth (accomplishment for one).
Like anything taught, repetition and structure will help make it stick. Unfortunately, cultural influences (the consumer society in which we live) will provide on-going challenges, so it is even more important to build it in to your child's (or grandchild's) regular routine (like brushing their teeth).
It is as important as that.
Understanding value (in financial terms) will be one of the most essential aspects of their lives as they grow (and may be helpful in future years when you, as a parent, have to start giving reasons for saying "no"). Knowing what happens to that saved money when it is spent frivolously and is "gone" (and you have to start all over from the beginning), is a pretty daunting experience and a compelling lesson. Learned early enough, it might just stick.
Like anything, the more enjoyable the routine, the more likely that it will continue.
So play the "what if" game for a few minutes each day:
"What if" we get to $100 and start to earn a return (not much in a bank account at the moment, but it is a place to start) that helps to add to her/his savings. That can also be powerful, if you can forecast how much they might have in 1, 2, 3 or more years with a combination of saving and compounding. Then you have the ability to set goals and there is nothing better than the life lessons learned from setting and achieving goals, regardless of your age.
So set some goals and track them.
Pretty soon, you have a plan.
Everyday, check the plan.
One day they may just thank you!
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist