My oldest son is five years old. For the past couple of years I have been teaching him about money. Periodically, when he does me some small service, such as helping with his brothers or helping to clean the house I give him a dime or quarter. Sometimes he gets small amounts of money from him grandparents or relatives. The problem is that I am not completely sure that he gets the true value of money because he is never required to spend any of it.
Yesterday I decided to do something about it. My son really loves his Wii console and every few months I buy him a new game for it. Well, a really fun game just came out called Mario Kart Wii - the game comes with a plastic wheel and you can race your car by steering the wheel (I am telling you those Nintendo guys are geniuses). Long story short, I bought my son the game and when I came home and he saw it he got extremely excited. He asked: is this for me? I said, actually, I bought it for myself, but I am willing to sell it to you for $5. It took my son all of about one micro-second to say "deal". He then rushed upstairs and got $5 in exact change from him cash box.
For the past 24 hours he has been proudly announcing to everyone how he bought his new game from dad. I think this approach will help my son learn what you can and can't do with money and will also educate him to the value of saving. I think I will continue along the same lines by asking him to purchase - for much reduced costs - things that I would otherwise simply give him.
Any opinions about this strategy?