How can you teach a three year old to budget when they don’t understand money?
My husband and I paid off $70,000 in debt and have changed our beliefs from accumulating stuff to accumulating life experiences. We wanted to teach our son some of the lessons we’ve learned.
As a mom, I have been trying to figure out how to teach my son about money, and find a system to reward him that doesn’t involve sugar or toys.
Many experts say not to give your children an allowance at this age because they don’t understand it. I feel like now is the perfect time to teach them what money does, even if they don’t understand the mechanics of it yet.
I’ve also tried hard to reward my children without the use of candy or gifts. I don’t want them get used to being rewarded with food or stuff. As an adult I am too used to rewarding myself with food or stuff!
I wanted to teach him about saving, and spending and I also wanted to reward him with more than just praise. We came up with our own solution – the Chip System.
I’ve been amazed at how well it has been working.
The Chip System
He receives chips for doing extra chores around the house, such as cleaning his room, vacuuming with the dust buster and helping with the laundry.
He also can earn chips when he demonstrates good behavior. Since we go out to see live performances often (my husband is a performer and we travel to his shows often) we wanted something to reward him for being good. Before the evening out we let him know that if he is a ‘good listener’ for the outing he will receive a chip.
We are able to warn him if he isn’t being a good listener, and the chip system reminds him of why to be a good listener. Previously we had tried saying that being a good listener makes Momma happy, and if he isn’t a good listener it makes Momma sad, but that apparently wasn’t enough. (surprisingly!)
He has even been so good and helpful at the end of the evening we have decided to give him two chips.
He can then gauge how he acts to the rewards he gets, without giving him candy or stuff.
He can spend his chips on different rewards:
Sweet Treat = 1 chip
Video Game (20 min) = 2 chips
Short Video (20 min) = 2 chips
Computer Time (20 min) = 2 chips
Movie (1.5 hours) = 3 chips
Trip to the Park = 6 chips
Trip to the Children’s Museum = 10 chips
Trip to the Movie Theater = 12 chips
Trip Out to Dinner = 12 chips
Spending his chips are very special. So even if he wants a sweet treat at 7am, if he uses a chip, he gets one. We do watch videos and have computer time at other times, but he can use the chips for special times when we normally would say no.
Why Use Chips Instead of Money?
- Reason #1 – He doesn’t understand the different values of money yet. A quarter or a penny is the same to him, and while we are still working on learning about money we wanted a system we could use now.
- Reason #2 - Money isn’t special. Grandma gives him a dollar, or he finds loose change on the ground. He was given five dollars and left it in his toy box. We needed something that he would see as special too.
- Reason #3 - Money isn’t a good reward system for us. We shouldn’t have to pay him to be on his best behavior. He shouldn’t have to pay us to watch a video at home. It’s a very fine line, and using a chip system works better for us.
Budgeting with Chips
Currently he is saving his chips. He either wants to go to the movie theater or buy a rocket ship.
(Note: A rocket ship is not on the list, but he has been adamant that he is saving for a rocket ship. “A REAL one Momma, not a plastic toy one.” We’ll have to see how that turns out!)
What has been really interesting is to see his thought process since he can use his chips on anything he wants. We usually confirm his decision and make sure there is nothing else he wants to use his chips for.
For example, the other day he said he wanted to watch a video, but since it was getting late and we usually don’t watch TV on Monday’s I said no.
He asked: Could I use my chips?
I said: Of course you can, but just remember if you use two chips for a video now that is two less chips you have for going to the movies. Do you want to use those chips to watch a video now, or do you want to save them for the movies?
He replied: Oh, well.. Momma I really want to go to the movies.
He decided to save the chips, and we played in the sandbox instead.
Our chip reward system has been working very well for us. It’s been teaching him to save, and make decisions about what things to experience, rather than getting more toys or candy. (Most parents understand we don’t need any more toys!) Plus it’s making him responsible for his actions and his rewards.
Leave a comment and let me know what you think about the Chip System, and I would love to hear if you start using it too!
For more from Jaime check out her blog Eventual Millionaire where you can join the journey to become a millionaire by becoming debt free, creating your ideal life style and making your million doing what you love. If you like what you’ve read then you should consider subscribing to Eventual Millionaire via RSS.