It’s not too early to start teaching preschoolers about money! Discover 12 ways to make learning about money fun, interesting, and impactful.
It’s the taboo topic, even among adults. We’re not supposed to mention incomes, debts, or how much we spend on purchases. We size each other up based on our perceived worth.
Yet so much about money pervades our lives, from the opportunities we have to the values we shape. It’s what determines whether we save for college or stay home with the kids.
Like many people, I didn’t get a well-rounded education about money, certainly not from school. Sure, we learned how to write checks and filled out worksheets about coins. And yes, I had a vague idea of what my parents did for a living.
But I was also fortunate: I graduated college with no student loans, paid off the balances on my credit card, and entered adulthood with no debt.
That said, I also didn’t save much. I simply spent the money I earned from my first job on things I could now afford. You know, adult things: Furniture (“No more hand me downs!” I would say). Dinners. Going out. I even confessed that I now “deserved” a brand-new car—until a cousin knocked some sense into my head.
I didn’t save aggressively when I had the opportunity to. (And when I didn’t have child-related costs depleting my budget.)
Only through my post-college years did I get into personal finance and financial literacy. I discovered smart ways to save, invest, and put money to good use. More recently, I learned about unconventional ways of earning besides “getting a job.”
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Teaching preschoolers about money
Want to know the number one influence on a child’s financial behavior? It’s not the media, peers, or even DNA.
It’s you and me. Parents make the biggest impact on whether kids will go into heavy debt or pay off bills, learn to save or spend more than they earn.
I want to pass my passion for personal finance and money onto my kids. I’d like them to balance smart saving with intentional spending, to invest for the future while enjoying what they have. But how do you start? And at what age?
Turns out, this starts younger than you think—in the preschool years.
You can teach kids about money even before they know anything about math and numbers. Before allowances and first jobs.
In fact, teaching preschoolers about money is a fantastic time to introduce them to finance. While money terms are important for adults (IRA! compounding interest!), we can start teaching the behavior and psychology behind money. The “why”s of how we spend, save, and earn.
We want to raise kids with clear values about money, to show them how to use it as a tool for opportunities. Where they understand the difference between excess and enough and know better than to spend more than they earn.
These 12 ways offer factual lessons taught to your child’s level. They draw on his curiosity about the way the world works, as well as his ability to make everything fun. Best of all, he can apply these lessons to his everyday life.
By starting now, you’re helping him develop a healthy relationship with money. You can raise him to be responsible and generous with money, starting with these 12 ways:
1. Make chores a regular activity
As an adult, you child will turn to these values to make hard decisions, persevere, and stand out above the rest. She might work for a company or start her own. Either way, she will have had the experience of routine responsibilities that may or may not have been pleasant.
But here’s the thing: don’t pay her to do these chores.
In fact, kids should do chores simply to contribute to the household, not to earn money. Instead, having regular chores is about drilling down the idea of discipline and doing a job well done.
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2. Encourage your child to wait
Have you ever stood with your child in a long line at the grocery store? If you’re like most parents, you felt a wave of panic thinking how in the world he’s going to behave while waiting for your items to be rung up.
But guess what: all that waiting is actually good for him.
By learning to wait, he’s less likely to give in to impulse buying or quick wins, and instead see the value in waiting for even better results down the line. He can put aside gift money to save up for a scooter, instead of spending $5 here or $10 there for smaller-priced items he doesn’t even truly want.
Come adulthood, he’ll see the value in setting money aside for retirement. He can also have fantastic vacations, all because he’s already learned how to save money.
Now, this doesn’t mean that waiting is pleasant. Far from it. But while he won’t stop experiencing its discomfort, he will instead learn how to cope with it.
Through waiting, he’ll come up with creative ways to keep himself entertained. He might play with his baby brother or count the items in the cart instead of whining or wishing to hurry up the process.
Here are a few ways to teach him to wait:
- Say “no.” Don’t concede to every request and avoid spoiling your kids.
- Don’t give in. If it’s only 30 minutes before dinner time and he wants to eat, have him wait instead of giving him a snack.
- Say you’ll think about it. If he asks for something and you have no plans to purchase it, say you’ll think about it. Ask him to do the same and wait at least a day to see if he still wants the item.
- Show him how to find distractions. Encourage him to find ways to distract himself while waiting. Praise him for behaving well and entertaining himself while waiting in line.
3. Encourage your child to save
The best time to start a savings account for your child is the minute she starts receiving money for gifts. Take half of that money and stow it in a college savings fund. Then, take the other half and put it in a savings account.
Saving can even start with a piggy bank.
I’ll admit: I didn’t get my kids a piggy bank until someone gifted my twins with one. These days, I can’t imagine what we’d do without it. Because every time we happen upon loose change or petty cash, they love dropping the money into their bank.
At the end of the year, we open their piggy bank and have fun sorting the coins into rolls. I then explain that I’ll take these rolls to the bank. Half will go to their college fund, and the other half into their savings.
If anything, a piggy bank simply gives your child a place to store coins. She knows exactly where to put her money.
4. Count everything
Understanding money starts with basic counting. After all, we can’t know how much money we have if we don’t know how to count and measure it.
Make it a daily habit to count with your child, from simple games like counting building block pieces to playing math games with beads. And of course, you can always count money, especially if you’re sorting through his piggy bank.
Once he understands basic counting, introduce different ways to count multiple items. For instance, you can arrange pennies in groups of tens, then count by tens to show how many dollars he has.
5. Introduce your child to different coins
By the preschool age, most kids can sort the different coins and understand how much each one is worth. They’ll be able to tell pennies, nickels, dimes, and quarters apart, as well as tell you that dimes are 10 cents and quarters are 25.
They may not be able to add them up just yet, but they’re not too young to learn their differences, both in appearance and worth.
The best way to introduce coins is to simply show your child real coins. Worksheets are fine to supplement, but since most of us have access to coins, seeing and feeling the actual coins is an easier way to learn.
6. Explain how you earn money
I sometimes wonder if kids think “work” is simply where their parents go when they’re apart. After all, we hardly—if ever—take them to our workplaces, so work sounds like this mysterious place we go to or do on our computers.
But work can be a fantastic opportunity to share how we—and the world in general—do things to earn money. Your child learns that we offer value, time, and knowledge in exchange for money. Be creative when explaining your job to her level, framing it in ways she can understand.
Better yet, talk about what you love about your work, especially if you truly feel passionate about it. Too many kids are seeing parents trudge to work, painting a negative picture of what it means to contribute to society.
If you don’t love your job, talk about why you love having a job, from the ability to provide for your family, to spending time with your coworkers. And if you don’t have a paid job, talk about how your partner or other family members earn income.
7. Talk about other people’s work
On that note, another fantastic way to show the value in work is to talk to your child about other people’s work. Simple ones to start with are those he already sees, from his pediatrician to his teacher to the firefighters driving the truck.
If you have family and friends with interesting careers, even better. Talk about how your friend is a weather anchor for the morning news, or how his uncle is a mechanic for city buses. Share how your college friend started her own business, and how another illustrates children’s books.
By giving him a wide scope of careers, he can see how there are different ways to earn money.
8. Describe store and money interactions
I hardly use cash. In fact, the one time a week I do is at our farmers’ market, where many stalls prefer (or sometimes only allow) cash exchanges over credit or debit cards.
But I love that my kids can see the exchange of money for goods every week. It’s harder to understand the process of using money when all they see are our credit cards. Whether we’re buying a $5 coffee or $500 furniture, it all looks the same if we’re only using cards.
Cash, however, makes for a more interactive exchange. We count the money we give the vendor and usually get change in return. I even have my kids give the cashier money, who then like to ask them how much change they should give in return.
Explain the exchange of money for goods or services by describing store interactions. Tell your child you’re giving the vendor $2 so that you can take home four sweet potatoes. Or how you’re paying the restaurant because they cooked and served you food.
At the bank or ATM, explain how you store your money in a bank and once in a while use a card like a key to take some out. She won’t think that banks and ATMs are flush with free cash. Instead, you’re taking your money out to use.
9. Don’t indulge impulse buys
Buying on impulse isn’t an absolute evil—you might decide on a whim to treat the kids to ice cream after dinner. You didn’t plan to spend that $17.75 at the ice cream store earlier that morning, but the choice to do so gave you a fun experience.
But done too much—especially where temptations run high—can set a bad example for your child. Impulse buys run against the value of saving and planning, two skills he’ll need to be financially successful.
Instead, make a habit of writing a shopping list each time you run an errand. Explain why you’re there (“We’re going to the toy store to buy a gift for your friend’s birthday party“) so you’re both clear on expectations.
Distinguish between “wants” and “needs.” Show the difference between a necessity and a luxury, the everyday and the once-in-a-while. We need to eat lunch, but we don’t need to order lemonade. Saying “I need to get a new jacket” would be better said with, “I want to get a new jacket.”
Define family essentials and extras. You may need to spend time together as a family, but an expensive vacation is an extra.
And avoid responding to his requests with “We can’t afford it” or “I don’t have money for that.” Because you can, and you do. Instead, explain that that’s not what you came here to buy, that you’ll think about it, or that you’ll consider putting it on the list for next time.
10. Talk about the purpose of advertising
My kids hardly watch television, and when we do, they don’t see too many commercials. I’m glad for it, since advertising can be very confusing to children. If at all possible, keep your child away from advertising, especially at a young age.
But even then, she’ll still likely run into ads, from television to the Internet to the billboards you drive by every day. Instead of avoiding advertising completely, talk about its purpose.
Ads themselves aren’t rooted in evil—many businesses rely on ads to earn income, after all. But talk about what they are and why they exist. That the kids on the commercial are acting, or that the creator of the ad wants you to buy the product.
You can even point out the techniques they use, such as the upbeat music, flashy graphics, and fancy food styling.
11. Start a college fund
When your child receives money (like through gifts or earning it), have her save some into a college fund. This teacher her money habits of saving a percentage of her income for long-term savings, just as we adults save for retirement.
You might even want to pitch in and match her contributions. For every $1 she saves in their college fund, add an extra $0.50 or $1.
This encourages her to set aside money she’ll never touch for years. When she’s an adult, setting aside 10% of her income for retirement won’t sound strange. Nor does the idea that she doesn’t have to spend every penny she earns.
It’s true that not everyone needs to go to college to succeed. Many people graduate with degrees and still find themselves in meaningless work. But statistically, people with a degree have more opportunities and income. The higher the degree, the higher the income and life satisfaction tend to be.
Still, I’m less concerned with income (there are plenty of other ways to encourage kids to be successful) than I am about saving for a long-term goal. College is just one way to set aside money that will be put to good use. You can set aside a “down payment” savings for her first home, for instance.
12. Encourage your child to think different—and think big
Only in my 30s and 40s am I realizing lessons about money I wish I knew earlier in life. I’m slowly “un-learning” many limiting beliefs I held about money, and want to teach my kids a different way to think about earning it.
For instance, money is abundant. Your child isn’t limited by how much money she can earn due to her job, gender, or career choice. There are also plenty of ways to earn money besides traditional employment, like starting a business or freelancing.
I also want my kids to think big. My son and I were walking through the mall, and for some reason he was enamored by all he saw, from the decorations to the delicious smells at the food court.
He then said, “I want to work at the mall when I’m bigger!” He wanted the benefit of being at the mall, and saw working there as a way to do so.
Except, I replied, “You know, you could also own a mall when you’re bigger.”
In my home, my family and I have honest conversations about money. We don’t talk about it as an evil thing, but rather something we all use. At the same time, we also don’t want to raise materialistic kids, and instead value character and kindness above all tangible things.
It’s possible to start teaching preschoolers about money so they can develop a healthy relationship with it.
Start by making chores a regular activity to instill the values of responsibility and discipline. Encourage your child to wait to learn impulse control, and give her a piggy bank to save money. Count everything, and introduce different coins. Explain what you do for work as well as how other people earn money.
Have her see you using cash to learn about exchanging money for value. Avoid impulse buys and talk about the purpose of advertising. Start a college fund as a way to practice saving, and encourage her to think differently—and to think big.
It’s never too early to start teaching preschoolers about money — because there’s definitely more to learn than how to write a check.
Get more tips:
- Are You Teaching These Life Skills Your Child Needs in Adulthood?
- Raising Children on a Tight Budget
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