A Budget Lesson for Toddlers

Thanks to a recent run-in with bedbugs, we threw away all of my four-year-old's toys. I've since promised my daughter that I will buy her some new ones. But rather than just surprise my little girl with a bag full of presents, I've decided to make this one of those teachable moments and I'm going to make her stick to a budget.

I'll admit that I didn't come up with this idea entirely on my own. It comes from a conversation I had with Sharon Lechter, the co-author of "Rich Dad, Poor Dad" and the founder of Pay Your Family First, which develops programs and products to improve financial literacy. I explained to Sharon that I want to include my daughter in the shopping process but I'm concerned that she won't be able to wrap her head around the idea of a spending limit. She'll likely want everything Toys"R"Us has to offer and throw a very public temper tantrum when the inevitable in-store negotiations begin.

I love Sharon's solution to my problem. She recommends I go onto a site like Amazon and create three shopping carts of playthings that all cost the same amount of money. The first one would include a few expensive toys. The second would have lots of cheaper items. And the third would contain a combination of costly and inexpensive stuff. My daughter then gets to choose which basket she prefers.

I've already started laying the groundwork for this lesson by asking my daughter if she wants a lot of little toys or just two big ones. So far, she's leaning toward quantity over quality. That's basically what I expected from her. But I'm hoping she goes with more of a combo approach since I would prefer she chooses at least some games that will keep her interest for more than three minutes.

If this budgeting lesson works, I would love to implement it during the holiday. I won't create three baskets again since I want to maintain some element of surprise. I may, however, encourage my daughter to use the shopping cart calculator to help her hone her "wish list".

More on MoneyWatch:
Financial Literacy: What Your Kids Need to Know
Money Skills for Your Kids: Ages 4 to 9
Kids' Allowance
Blocks II image by Hey Paul, CC 2.0.