When should I begin talking about money with my child?

From a young age, children are watching what the adults around them do and emulate that behavior - even before they can read or write. And by the age of 3 children begin to understand the concept of accumulation. So at a very young age (as young as 3) adults can begin talking about basic money concepts with their child (setting a goal, creating a budget, when money is gone, it’s gone). Start with activities they may already be doing with you, like shopping for groceries. Before going to the store, create a shopping list and a budget and have them help complete the list and compare prices to help stay within the budget. Do simple price comparisons for products on the list that kids know, etc.

How much money should be allocated for each money choice?

Always teach in a way that is “age-appropriate”. So, based on the age of your child, select your approach. Then, before they make a deposit, talk about goals for each choice. “Save” should, at the youngest ages, be very short-term - toy, book, video. While “Invest” can be something to save up for to get in about a year. For the older child, “Save” goals are a year away and “Invest” goals are 10 years in the future. Then, once you have had the choice and goal discussion, step aside and let your child make the distribution – without any input from you. Just observe. The child will show you what’s important to them as they make more and more deposits in any one choice. Then parents can really see where their head is and can then incent the choice that is being ignored – or teach to that choice – until the child is more aware of or more comfortable with it.

Should I start an allowance with my child? If so, when?

Setting up an allowance for a child is an opportunity for them to practice their money skills (setting goals, saving, delayed gratification, etc). But when to start will depend upon the child - not based on age, but on their level of understanding of money values, interest in saving to reach a goal, etc. Click this link for more on allowance