Piggy Bank Lessons for Toddlers

Earlier today, I took my 2-year-old daughter to the toy store using the money she had accumulated in her piggy bank over the past several months by picking up her toys and doing other age-appropriate chores. This was the first time we ever broke open her piggy bank, and it was an opportune time to teach her the basics about earning, saving, and spending money. As I saw her grasp some of the key concepts that I was hoping to teach, I realized that it is never too early (or too late) to start teaching your kids about money.

Here are a few lessons that my wife and I were trying to teach:

Lesson #1: Money comes from hard work. The first thing my daughter learned during this process was that she earns money by doing chores and other forms of work. For a 2-year-old, the "job" is pretty simple. Pick up some toys and earn a few pennies. As she grows older, her job description will expand and so will her commission.

Lesson #2: Save money and watch it grow. Although my daughter's piggy bank didn't pay interest, it was still exciting for her to see how the money began to pile up over time. She really enjoyed dumping all those coins out to see how much was there.

Lesson #3: Money takes on several different forms. At first I was a little worried that my 2-year-old would have a meltdown if she began to think that all of her hard-earned coins were being swallowed into the abyss by the Coinstar machine that converts loose change into hard dollars. To prevent this from turning into a traumatic experience, my wife and I explained the process to her and reminded her that the end result would be a trip to the toy store to purchase new toys. Fortunately, dumping all those coins into the machine and hearing it go "cha-chunk, cha-chunk" was part of the fun for her, and she enjoyed holding onto those greenbacks even more than her heavy piggy bank.

Lesson #4: If you buy bargains, your money will go farther. Once the coins were converted into dollars, we took her $8 and went to the Dollar Tree. I could have taken her to "Toys-R-Them," but I figured that she and I would both be a little disappointed when her months of savings would only buy one small overpriced toy. So, off we went to the Dollar Tree to give her the ability to buy up to 8 different toys / items. I think she was happily surprised when she kept adding toys to her basket and didn't get scolded for it. At the end of the day, she came home with a balloon, coloring book, bubble wand, stuffed animal, crayons, stickers, a book, and flash cards.

Lesson #5: Prioritizing your "wants" is a fact of life. We'd all love to be able to walk into a store and buy anything our heart desires, but this just isn't reality. My 2-year-old learned a lesson today that some 50-year-olds (and the federal government) still haven't grasped: money is finite. You can't spend more than you earn, and you must make difficult choices with limited resources. My daughter had to choose between the "Winnie the Pooh" flash cards and the cool hand stamp. She easily would have bought the whole store if I wasn't careful, so we had several discussions on which items she wanted to keep and which ones we had to let go.

Overall, it was a very fun and successful outing. For this first piggy bank experience, I let her spend almost all of her savings to get the general feel for the process and to become excited about earning more money. However, next time we're going to introduce a few new lessons by only spending a portion of her money and giving a portion away. This way she will learn about long-term savings and the joy and importance of giving to those in need. These are lessons that all of us can brush up on from time to time.