What To Do With The Money In The Piggy Bank?

When my each of my kids were born, they received a piggy bank with twenty dollars in coins inside.  As time went on, more change was added to each bank, either from grandparents or my husband or I sticking some extra change in there.  Up until about a few months ago, neither child every really expressed an interest in the piggy bank or what was inside.  But now that my son is four years old, he understands that there is money inside his piggy and started taking it out to sort the coins.  When I would take him to various stores with me, he would ask about buying toys and I would reply that I didn't have money for toys on that particular day.  Well, the light bulb went on one day and he replied "but I have money in my piggy back so I can buy it, right?"

The Big Purchase - Lego Coast Guard Truck & Trailer

Huh.  He was right.  I knew this day would come eventually.  And while I don't want him spending all that money on toys, I didn't really have a good reason about why he couldn't.  He has a bank account for savings and we'd never talked about his piggy bank money with him or determined what use it was going to have. When we got home he took his bank and opened it and started sorting his money.  I helped him count out how much he would need.  We explained to him that if he took the money out to buy this toy, there wouldn't be a lot of money left in his bank.  He said he understood and so we planned a trip to the store for the next day.

He proudly held the little bag I had put his money in all the way to the store and proudly handed it over to the cashier.  This incident made me realize that it is really time to start talking to him about money, about its value and educate him on money management.  When he turns five, we'll start him on an allowance.  Click here for some great tips on starting kids on an allowance.  I really like the "some for savings, some for sharing" idea and then the rest they can decide on how to spend it.

Do you give your kids an allowance?  Any tips or strategies that work for you?