It’s not too early to start teaching preschoolers about money! Discover 12 ways to make learning about money fun, interesting, and impactful, even for young kids.
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. The opportunities we have. The values we shape. Paying for college. Staying home with the kids or not.
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 notion of what my parents did for a living.
I was also fortunate: I graduated college with no student loans. I learned to pay off the balances on my credit card and entered adulthood with no debt.
But I also didn’t save much. I assumed I should spend money I earned from my first real 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.
Sure, I saved a bit here and there in a retirement account, and I still never got into debt. But I could have benefited from saving aggressively when I had the opportunity to. (And when I didn’t have kid-related costs depleting my budget.)
Only through my post-college years did I get into personal finance and learning about money. I discovered smart ways to save, invest, and put my money to good use. More recently, I learned about unconventional ways of earning besides “getting a job” (like blogging!).
Teaching preschoolers about money
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, and to invest for the future while enjoying what you 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 kids 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 and save and earn.
After all, we all know how to add and subtract, how to open bank accounts and how to earn money. Yet why are people in a position to make financial gains instead make financial mistakes?
We want to raise kids with clear values about money and use it as a tool to live a life with opportunities. Where they can decipher between excess and enough and know better than to spend more than they earn.
These 12 ways offer factual lessons but taught to their level. They draw on their curiosity about the way the world works, as well as their ability to make everything fun.
Best of all, your preschooler can apply these lessons to what she sees in everyday life.
By starting now, you’re helping your preschooler develop a healthy relationship with money. You can raise kids to be responsible and generous with money, starting with these 12 ways:
1. Encourage your preschooler 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 she’s going to behave while waiting for your items to be rung up.
But guess what: all that waiting is actually good for your child.*
You see, by learning how to wait, she’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.
In childhood, this might mean putting aside gift money so she can save up to buy a scooter, instead of spending $10 here or $20 there for smaller-priced items she doesn’t even truly want.
Come adulthood, she’s more likely to see the value in setting aside money for retirement, or even open up the possibilities of taking fantastic vacations—all because she’s already learned how to save money.
Now, this doesn’t mean that waiting is pleasant. Far from it. It’s not that your child will stop experiencing the discomfort of waiting—it’s that she’ll learn how to cope with it instead.
Through waiting, she’ll come up with creative ways to keep herself entertained (like playing with her baby brother or counting the items in the cart) instead of whining or wishing to hurry up the process.
We can teach our kids to wait through simple things:
- Say “no.” Don’t concede to every request and avoid spoiling your kids.
- Have them wait. If it’s only 30 minutes before dinner time and your kid wants to eat, have him wait instead of giving him a snack.
- Think about it. If they ask for something and you had no plans to purchase it, say you’ll think about it. Ask them to do the same and wait at least a day to see if they still want the item.
- Find distractions. Encourage them to find ways to distract themselves while waiting. Praise them for behaving well and entertaining themselves while waiting in line.
2. Encourage your child to save
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The best time to start a savings account for your child is the minute they start receiving cash 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.
As they grow and ask for things you’d rather not buy, introduce them to their savings account. Show them that this money is theirs to use on purchases they’d like to make.
Should they ask for a big-ticket item, don’t buy it for them. Tell them to save up for it using their savings account. The extra time needed to make this happen just might convince them that they might not want that item after all.
It 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 did without it. Because every time we happen upon loose change or petty cash, the kids love dropping the money into their bank.
At the end of the year—after Christmas, in fact—we open up their piggy bank and have fun sorting the coins into rolls. I then explain that I’ll take these rolls to the bank, where half of it will go toward their college fund, and the other half into their savings in case they want money to spend.
If anything, a piggy bank simply gives you and your family a place to store coins. Your child knows exactly where to put her money, and knows that after a certain time, she can use it to spend, save, or give.
Here are several piggy banks that would work well:
3. 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 Lego pieces to playing math games with beads. And of course, you can always count money, especially if you’re sorting through her piggy bank.
Once she 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 she has.
4. Introduce your preschooler 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 and quarters are 25.
They may not be able to add them all up together 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 preschooler 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.
You can also play fun games to introduce coins, like the Money Bags Coin Value Game:
5. 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 parents have to go to.
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 your child’s 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.
Even 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.
6. Talk about other people’s work
Another fantastic way to show the value in work is to talk to your preschooler about other people’s work. Simple ones to start with are those she already sees, from her pediatrician to her 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 her uncle is a mechanic for city buses.
By giving your child a wide scope of careers, she can see how there are different ways to earn money.
7. Make chores a regular activity
Here’s a little secret: it’s totally possible for kids to like chores. In fact, it’s important that they do.
Many of them are happy to bear responsibilities, perhaps those a notch above what they’re used to. The effort it takes to do chores as well as finally getting them done are enough to make any child feel proud.
Chores are also a fantastic way to introduce the value in hard work. Parents often ask me for help about their kids who are “box-checkers”—they simply want to get the job done to get on to what they really want to do. Others tell me they’re frustrated with nagging their kids about chores.
The trick is to talk about chores in a positive way. Chores give kids the autonomy many of them crave, so let them make mistakes and do things their way, even if it’s not exactly how you would’ve done it. They can also be fun, such as sorting toys or racing to see who can clean the fastest.
Most of all, make chores a regular activity, built into your routine, so that your child expects them as part of her everyday life.
Struggling with getting your kids to do their chores? Want to develop good habits from the start? Join my newsletter and download my Printable Chore List templates to help you and your kids organize chores!
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 offer) 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 get change in return. I even have my kids give the vendors money, who then like to ask my kids how much change they should get 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, show her how you store your money in banks and once in a while use a card like a key to take your money 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—just the other day, my husband and I decided on a whim to treat the family to ice cream after dinner. We didn’t plan to spend that $17.75 at the ice cream store earlier that morning, but the choice to do so gave us a fun experience.
But done too much—especially where temptations run high—can set a bad example for your preschooler. Impulse buys run against the value of saving and planning, two skills she’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 only to buy a gift for your friend’s birthday party”) so you’re both clear on expectations.
Distinguish between “wants” and “needs” as well, showing the difference between a necessity and a luxury. The everyday and the once-in-a-while. We need to eat lunch—we don’t need to eat cake. Saying “I need to get a new jacket” would be better said with, “I want to get a new jacket.”
Define what your family needs and what’s extra. It’s fine to feel like you need to spend time together as a family. But you don’t have a rational “need” to do so on an expensive vacation.
And avoid responding to her 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 commercials. I’m glad for it, since advertising can be very confusing to children. From Common Sense Media:
“At around age 8 kids understand that ads are trying to sell something. Before that, they take ads at face value and assume they’re like any other entertainment — or maybe even real.”
If at all possible, keep your preschooler 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, 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 and flashy graphics, to the smiles on the children’s faces.
11. Start a college fund
When your child gets money (like through gifts or earning it), have her save some into a college fund. This gets her into the habit 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 their contributions. For every $1 she saves in their college fund, add an extra $0.50 or $1.
This method 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, and many people graduate with degrees and still find themselves stuck in meaningless work.
But statistically, people with a degree have more opportunities and income—the higher the degree, the higher the income tends 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 the habit of saving for a long-term goal. And college is a fantastic way to set aside money that will be put to good use.
I also think college has other benefits besides earning potential: a wider exposure to the world, meeting friends, and developing a love of learning are just a few.
12. Encourage your preschooler to think different—and think big
Only now in my 30s 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 I 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, such as starting a business or freelancing.
I also want my kids to think big. A few months ago, 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.
I replied, “You know, you could also own a mall when you’re bigger.”
I want my kids to think different, and to think big.
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 we value character and kindness above all tangible things.
It’s definitely possible to start teaching preschoolers about money so they can develop a healthy relationship with it. To recap, here’s what we discussed:
- Encourage your preschooler to wait
- Give your preschooler a piggy bank
- Count everything
- Introduce your preschooler to different coins
- Explain how you earn money
- Talk about other people’s work
- Make chores a regular activity
- Have your preschooler see you using cash
- Don’t indulge impulse buys
- Talk about the purpose of advertising
- Start a college fund
- Encourage your preschooler to think different—and 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:
- Teaching Kids to Save Money
- Are You Teaching These Life Skills Your Child Needs in Adulthood?
- Raising Children on a Tight Budget
- What You Need to Do when You’re Stressed about Money
- The Best Children’s Books That Introduce Kids to Math Concepts
*Source: Family Institute
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