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Finance for Parents

Got a 4-Year-Old? Check These 4 To-Dos Off Your List

By Ellen ChangFeb 11, 2020

By the time your toddler turns 4, their boundless and unrelenting questions may leave you feeling more than ready for that whole school thing to get started.

Before you start packing up all those school supplies and bagged lunches, now’s a good time to do a quick check-in on a few different fronts.

Are you prepared with your own financial game plan as your babe transitions from “threenager” to full-on preschooler? Do you have a plan to start teaching your little one about money? Is your 4-year-old meeting the physical and social developments recommended by doctors and teachers?

1. Start Thinking About Allowance

Younger kids might see a piggy bank as more of a toy, but according to many financial advisors, your child is most likely able to start understanding the importance of saving—and delayed gratification—by age 4.

Financial literacy is important for both parents and their children, since almost two-thirds of Americans can’t pass a simple financial literacy test. One way to get started is to start giving your child a regular, small allowance.

The right amount varies by family, but a ballpark might be $1-per-age (meaning $4 for a 4-year-old) each week. The goal of allowance at this age is just to get your child used to basic concepts around how money works.

“By starting your kids early with a small allowance, you can let them learn by doing,” says Cynthia Meyer, a Certified Financial Planner with Financial Finesse. “You can use an allowance to teach delayed gratification, comparison shopping, spending choices, saving, investing and math skills.”

Gifts from grandparents, other family members and friends for birthdays and holidays can also be socked in a piggy bank, which your child can cash in for larger toys or a trip to the candy store. Simply discussing why your child should save their birthday cash encourages saving behavior and discipline.

There are different schools of thought on whether an allowance should be linked to chores, but the key is to get your little one used to the responsibility of having money of her own, and saving it.

2. Plan for College . . . and Other Stuff

Yes, OK, college is still a ways away, but 14 years may not really be as long as it sounds. After all, one of your greatest assets is time—so your money has the chance to grow and help you reach your savings goals. 

Start by truly considering how much you want to save for your kid's college education. If you’re looking for tax-efficient ways to save for college, you might consider a 529 plan or a UGMA account.

A 529 plan provides for tax-deferred growth, which means you can deduct your investment earnings from federal and, in some cases, state taxes. The money in a 529 plan can be used for tuition at a college, trade school or vocational school, room and board, and supplies like textbooks and laptops.

Meanwhile, UGMA accounts also have tax-deferral benefits, and don’t have to be used for college specifically. So, if you want to get a head start on saving for your child’s transition to adulthood without assuming that they’ll necessarily use the money for college expenses, you can save money in a UGMA account, which can go toward things like buying a used car or paying for first month’s rent.

“Simply contributing automatically via direct deposit every month is a major component to successfully investing for your child’s future,” says Ron McCoy, CEO of Freedom Capital Advisors in Winter Garden, Florida. “I did it for all three of my kids and it was instrumental in getting them through college and paying for their first car.”

3. Help Look Out for Your Family’s Future

If you haven’t already, it may be a good time for you and your spouse to think about buying a term life insurance policy since your kids are young (what is life insurance, exactly?). 

Although your individual needs will vary based on your personal situation, many financial advisors recommend getting a policy that covers five to ten times the income you’d like to replace, plus any additional amounts for specific future expenses like college tuition. Here’s more on how much life insurance coverage you need.

Full disclosure: Fabric sells term life insurance, which you can apply for in 10 minutes online, without speaking to a salesy agent. If you’re ready to take the plunge, apply for term life insurance now.

4. Know What’s Normal

Since every child develops at a different pace, comparing your toddler to your nieces and nephews or your neighbors’ kids is not a good idea, says Dr. Kimberly Williams, a New York-based clinical neuropsychologist and psychologist whose specialty includes assessing developmental milestones.

It can be easy to leap toward worry and concern if your bumbling babe isn’t perfectly synced up developmentally with his peers, but don’t immediately assume something’s wrong. According to the CDC, here are some milestones you might expect from a 4-year-old:

  • Enjoys doing new things

  • Participates in creative make-believe play, such as playing “mom and dad”

  • Appreciates the company of other kids and is learning how to cooperate with others

  • Uses words to express what they're interested in, including mastery of basic grammar

  • Can say their first and last name, in addition to naming some colors and numbers

  • Recites a poem or song by memory (think “Itsy Bitsy Spider”)

  • Pours, mashes their own food and uses scissors

Since motor skills are still developing in many 4-year-olds, your child might accidentally bump into other kids, says Williams. 

Many children this age don’t know how to share or deal with conflict, and some may become upset by too much sensory stimulation, such as bright lights and noise. Williams says, “When 4-year-olds are angry or scared, they do not have the vocabulary to express their emotions,” so they might react by biting or hitting.

While this is all normal and will end soon, it’s understandably frustrating. Try to focus on your child’s strengths, teaching them to communicate with words, identifying their emotions and thinking about how other children might react to their behavior. Sometimes a short timeout can be really effective, less as punishment than as a way to help your child take a beat if they're feeling overwhelmed.

If you think your child’s development or behaviors may be outside the norm, consult your pediatrician. For example, if your kiddo is having trouble drawing shapes, making a few friends, understanding basic grammatical concepts like “me vs. you” or “same vs. different,” or loses skills they once had, it might be time for a doctor’s visit.

Parenting can often get more complicated as your child gets busier, heads off to school and even starts extracurricular activities. Planning ahead, saving now and taking a deep breath can prevent plenty of headaches later on.


Want to skip ahead? Find out what you should know about having a 5-year-old.


Fabric exists to help young families master their money. Our articles abide by strict editorial standards.


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Written by

Ellen Chang

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