Book review: A Penny Saved

If you're reading a personal finance blog, you're probably either pretty savvy with your money already, or on your way there. But you had to start your financial education somewhere, right? Did you learn about money from your parents, or did you just learn as you went? And now, if you're a parent, how do you get your kids to learn how to make, save, and handle money?

That's the question that A Penny Saved addresses. Author Neale S. Godfrey uses a step-by-step approach to teaching your child about money. It's best to start young, but she says that her method will even work with teenagers. She breaks instruction techniques into three categories, depending on the age of your child: Preschoolers, School Age, and Teenagers.

Most of the teaching methods are fun and are intended to take advantage of the tendency kids have to want to "act grownup." Some examples of money lessons:

Preschoolers:

• The Change-Making Game: playing store–selling different items, taking the customer's money and making change
• The Shopping Game: choose an item and figure out how to pay for it and get the right change

School Age:

• Allowance: children receive an allowance for doing chores–no work means no pay!
• The Jar System: allowance is divided between Quick Cash, Short-term Savings, and Long-term Savings jars

Teenagers:

• Expanding money-making capacity by becoming an entrepreneur
• Introduction to checking accounts and credit cards
• Transitioning to the "real world"

My favorite thing about this book is that it gives concrete, step-by-step instructions on how to make your kid smart about money. I noticed that some of Godfrey's steps were practiced by my parents, and those things have helped me greatly. I think I would be blown away by the financial savvy of a child who was raised this way.