Teaching Kids About Money: An Age-by-Age Guide

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Most preschoolers would rather play imaginary restaurant at home than go out for dinner. It playfully promotes a variety of skills, such as setting the table, learning good manners, and making change. "Many 4-year-olds have to be reminded after the pretend meal that they have to pay the bill," says Dr. Singer, "but once they understand the concept, they get very excited about paying with pretend money or making change as the cashier."

Ages 6 to 8

"As soon as your child is receiving an allowance, he'll need a place to put his money," says Pearl. Make a trip to the bank an event. Help your child open a savings account, and encourage him to make regular deposits. As the balance grows, you can discuss the concept of interest and how the bank pays people back for saving their money. Many banks have children's accounts that offer no-fee and no-minimum-balance accounts.

This is also a good age to take up coin collecting as a hobby. (You can spark your child's interest with state quarters.) Visit the kids' section of the United States Mint Web site (www.usmint.gov/kids) with your child and learn about the evolution of U.S. currency. You'll also find online games and cartoons to keep your child engaged.

Ages 9 to 12

One way to teach comparison shopping is to read the store's price labels with your child, look at the size and price, and compare the bulk amount per cent. Don't forget to take quality into account. For example, one week buy brand-name paper towels. The next week, try a generic brand. Then discuss the differences and decide together if the brand name is worth the extra cost.

The all-American yard sale has you annually cleaning out your attic, garage, and child's closet. This year, put your child in charge. With some supervision, preteens may take to this project like a duck to water. They can handle much of the responsibility while learning about setting a value, making decisions, and helping you haggle with customers over prices.

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