Smart money habits should start young – here are 13 great simple ideas for teaching preschoolers about money.
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“Mommy, that is $4 – is that very much money?”
This is a question that Jack often asks when we are at the store. Ever since he could really understand, Jack has been SO curious about money and how much things cost.
I was recently sent a copy of the book, Make Your Kid a Money Genius (Even If You’re Not), which is written by Beth Kobliner. I’ve always been passionate about being money smart – and teaching Jack in the process. So I was pretty excited to read it.
I spent most of the day recently reading the book (focusing specifically on the preschool and elementary school sections, since that’s the stage of life we are in). I could hardly put it down, as every page was filled with interesting tidbits.
Beth starts the book by saying how parents of today are open to talking about everything with their kids – except when it comes to money.
It kind of made me laugh, because I feel like that’s one thing I don’t really shy away from with Jack. But, as I read the book, it became apparent that it really is something many parents avoid.
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Did you know that researchers at the University of Wisconsin-Madison report that by the age of three, many children are able to grasp economic ideas such as value and exchange. By the age of seven, a child’s view of finances and spending are already in place.
So it really is never too early to start teaching your child about money. This book is divided into sections for children from 3 to 23, so I definitely think it’s a must-read for all parents (especially if you haven’t been as wise with money as you should have been!).
Since I am well into the preschool years with Jack, I wanted to focus on tips for teaching preschoolers about money that I gleaned from this book (and I highly recommend picking up a copy of it – I learned a lot of good tips for our family finances as well!).
Get them a piggy bank
I think this sounds pretty simple, but I’m not sure everyone does it. In the book, Beth recommends making sure your preschooler isn’t just leaving money laying around. At this age, she doesn’t recommend having them put all their money in a bank account – so a simple piggy bank will work.
Throughout the book, she recommends having your child learn how to save and how to donate – so I think having a piggy bank that has sections for all of these is great. Jack likes being able to see some of his money, so we let him use his green bank above, but we also recently purchased a bank that has a division for spending, saving, and giving – so he uses both!
I’ve also found that kids love feeling like they have their own money – Jack was SO proud when he told me today that he had $100 in savings. I was pretty proud, too.
Don’t just use your debit/credit card
This was a section in the book I found super interesting – she told this story:
When Jessica took her four-year-old son to Target and pulled out a $20 bill at the register, she was horrified to hear him say, “Don’t pay for it, Mommy. Use your card instead.” She hadn’t realized he even onticed how hse paid for things, much less that he was learning to think that a credit card was a way to avoid payment.
Using a debit card is something I don’t really think much about – but I realized I never really have explained to Jack that using a debit card is the same thing as using cash. She suggests that the next time you go to the store, find an item that is $1. Show your child four quarters, a $1 bill, and your debit card, and let them choose which way you want to pay – and emphasize that it costs the same either way, regardless of how they pay.
I thought this was really important! It shows your child that a debit/credit card isn’t just a magical way to get out of paying – that it’s just a different way.
Have them grow a garden
Beth suggested this in the chapter about investing. While you certainly aren’t going to talk about 401ks and the stock market with your three-year-old, you can definitely teach them the basics of investing.
You can teach this principle by showing your child a seed, water, dirt, fertilizer, etc. and explain that all of these items are necessary to “invest” to get an even better product in the end – a beautiful flower or vegetable. While it doesn’t explain the complexities of investing, it does introduce the idea in a fun and memorable way.
Don’t fib about money
“We can’t buy that, I don’t have enough money.”
How many of us have said that one when our child begs us for something at checkout? I’ll admit, in the haste of the moment, I have.
Even if you don’t technically have money with you, Beth suggests that rather than saying, “I don’t have the money with me”, that you explain why you don’t think it’s a good idea to purchase that item right now (whether it’s because it’s not in the budget, sugar will ruin their teeth, or they already have 35 million Hot Wheel cars at home – just be straight forward).
Teach Your Child about Coins and Cash
It’s just good for kids to understand what different values are for coins and dollars. I remember offering a child once a penny or a dime, and they chose the penny because it was slightly large.
There are plenty of games out there to teach kids about coins – but one of the simplest (usually better for older preschoolers), is just to play store at home! You can get real or pretend money to have them buy things. It’s good to have them count out the money they have.
One thing Jack really enjoys is playing Monopoloy Jr. It’s a very simple game, but it definitely teaches you how to count money and pay for things. We also watch the Price is Right a lot together, and I feel that it’s helped Jack understand how much things cost (he loves guessing the final prices!).
Have them Pay
Occasionally when Jack has gotten some Christmas or birthday money, I let him take part of it and buy a toy at the store. Usually, he’s given a check, which I just deposit into my bank account, and we buy what he wants on my debit card.
However, I think it’s a far better idea to cash the check and give the child the physical money to pay for it themselves. Studies have shown that is more “painful” to part with cash than it is to use a card, so I think it’s a valuable way to teach your child what it’s like to buy something.
Have a family Pot
I loved this idea – have a family saving jar or something that goes toward supporting a family activity – whether it be for a special dinner out or for a family vacation.
Will their contribution be a lot? Likely not. However, it can make them appreciate the activity even more knowing that they contributed to paying for it. You can keep track of how much they contributed and let them know what their contribution helped for (one example was that the family could now get premium toppings on a pizza!).
On a similar note, I think it’s a GREAT idea to encourage your child to help you plan family vacations and activities. I’ve found that when Jack is more involved in the process of something, he tends to appreciate and enjoy it more.
Have them do chores
Even though I’m not the best at cleaning myself, I’ve always recognized the importance of having children do chores (even when I begrudgingly did them as a child/teenager). Beth references a study from the University of Minnesota that found that one predictor of achieving important milestones, such as getting a degree and starting a career, was related to if they did chores or not as a child.
Keep it simple when they are a little, but gradually increase the responsibility given. Even if chores may not be directly related to money, it can encourage a good work ethic and future success in their career.
Oh, and don’t pay them for their chores. Why? Well, you’ll have to pick up a copy of Make Your Kid a Money Genius (Even If You’re Not) to find out. Can’t give away all her tips 😉
Take your Child to Work
I think a lot of kids don’t really understand where money comes from. Forrest and I both work from home, and Jack doesn’t quite understand that we actually make money.
You can take them to work with you (or, if you are like us, have them observe at home) and explain what you are doing. You can show him or her simple tasks that you are doing and explain that by doing it, you make money which allows you to pay for your house, food, etc. You can even let them do something (such as copy a piece of paper) and give them a quarter for doing that job.
Plus they’ll love to be involved with your job! If you go away for work, it’s very likely they have no idea what you are actually doing!
Importance of having a job
Teach your child from a young age the importance of having a job. You should also emphasize that while they should enjoy their job, it’s more important to have a job so they can pay and save.
One idea in the book was to point out real jobs people have – especially ones that they may not see as regularly on TV. It’s important to emphasize that all these jobs are important, and it opens their eyes to all the possibilities for careers.
Beth also mentioned being positive about your job in front of your child – even if it’s not your dream job, express gratitude for having a job. It will reinforce the positive parts of having a job – not the negatives.
Don’t Avoid Saying No
I think most parents want to make their children happy – and in turn, they avoid situations where they have to say no.
However, children need to be told no. They need to realize self-control, and that they can’t always get whatever they want, whenever they want it. They might think you are the meanest parent in the world for awhile, but I promise, it will pay off in the long run.
Researchers at Duke University that followed children from birth to age 32 found that those who had trouble (or weren’t encouraged) to practice self-control as children typically had more credit problems as adults.
So, even if you dread taking your child to the store because you know they’ll ask for something a million times, still do it. They will eventually learn and will thank you for it 🙂
Difference Between Wants and Needs
You can teach your preschooler from a young age what wants and needs are.
This concept can truly be the foundation of being wise financially. So the next time your child begs for chocolate or candy at the store and acts like they will die without it, try to calmly explain that our bodies need healthy food to survive – such as fruits and vegetables – but sometimes we might want a special treat (but we won’t die without it).
Beth suggests walking up and down the aisles and pointing at certain items and ask if it’s a want or a need. If it’s a want, have them put it in the cart, and if it’s a need, have them leave it on the shelf.
Limit screen time
Over the holidays, I “joked” a few times that I was glad Jack only ever watched shows on Netflix and Hulu, because he had no clue what any of the “trendy” toys were for the season.
But I really was grateful for that. Our kids are inundated with advertisements everywhere they go – pressure to have the coolest and the best of the best toys and games.
By limiting screen time, you can at least eliminate that pressure from advertisers (peer pressure is another thing). However, if your child does see a lot of advertisements, you can once again talk about wants versus needs, and how sometimes the makers of these toys do their best to make you think a toy will make you happy, when in actuality, there are far more important things in life.
Start saving for college at a young age, and tell your child about it
Did you know that children who have savings accounts set aside specifically for college are more likely to go to college than kids who don’t?
Research out of the University of Kansas showed that families who make $50,000 or less a year are three times more likely to send their kids to college if they do!
Even if you aren’t able to put a lot of money in their college account, starting one is the first step. Once they are old enough to understand, start talking about college and how you can save for it together – if they learn from a young age thatt you are saving for that goal, it will be something they think about before their senior year of high school (and it will feel more like what’s supposed to happen, instead of just an option).
The thing that I liked most about Make Your Kid a Money Genius (Even If You’re Not) is the emphasis on having teachable moments with your child.
Teaching your kids about finances should be a continual conversation that starts from the time they are young. Life is full of moments where you can teach them about spending and saving money, self-control, work ethic, and working toward a goal.
I love the emphasis on slowly giving your child more financial responsibility as they get older – you can’t just give your child everything their whole life and then suddenly expect them to know how to handle money once they’ve left the coop!
Even if you haven’t always been the wisest with your money, you can help your child be a little wiser. I highly recommend picking up a copy of Make Your Kid a Money Genius (Even If You’re Not) no matter how old your child is!
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