How to Talk to Preschoolers About Money
How to Talk to Preschoolers About Money
1. When it comes to teaching kids about money, the sooner the better.
Up until they start earning a living, and sometimes well beyond that, kids are apt to spend money like it grows on trees. This lesson will help you put your children on the road to handling money responsibly.
Long before most children can add or subtract, they become aware of the concept of money. Any 4-year-old knows where their parents get money – the ATM, of course. Understanding that parents must work for their money requires a more mature mind, and even then, the learning process has its wrinkles. For example, once he came to understand that his father worked for a living, a 5-year-old asked, “How was work today?” “Fine,” the father replied. The child then asked, “Did you get the money?”
2. Once they learn how money works, children often display an instinctive conservatism.
Instant gratification aside, once they learn they can buy things they want with money – e.g., candy, toys – many children will begin hoarding every nickel they can get their hands on. How this urge is channeled can determine what kind of financial manager your child will be as an adult.
3. Seeds planted early bear fruit later.
It’s important to work on your child’s financial awareness early on, for once they’re teenagers, they are less likely to heed your sage advice. Besides, they’re busy doing other things – like spending money.
4. An allowance can be an effective teaching tool.
When your kids are young, giving them small amounts of money helps them prepare for the day when the numbers will get bigger.
“It’s actually easy to teach kids about money,” says Jayne A. Pearl, an Amherst, MA-based author of Kids and Money: Giving Them the Savvy to Succeed Financially. “Turn your day-to-day activities into learning experiences.” Trips to the bank, store, or the ATM machine, for instance, can be a perfect opening for a discussion about your values and how you use money. When children are very young, you can work money concepts into your child’s imaginary games, like playing pretend store or restaurant. Read on for some fun, simple ways to introduce finance to your child.
Ages 2 and 3
“A 2- or 3-year-old faced with a choice between a penny, dime, and nickel will almost always choose the nickel because of its size,” says Dorothy Singer, Ed.D., a senior research scientist at Yale University in New Haven, CT. But while very young children won’t fully understand the value of money, they can begin to learn the names of coins. One way to do this is to play the coin identification game. You and your child can trace around the outside of various coins and color in the shapes. Then invite your child to match the coin to the image while discussing each one’s name. (Note: Toddlers may try to swallow coins, so always provide close supervision.)
Young kids love to play store, but an imaginary shop in the living room is more than just a fun way for your child to exercise his imagination. By exchanging play money for goods, your child begins to understand the basics of commerce, says Dr. Singer. Use cereal boxes, fruit, sponges, or paper towels as store items. Together, make pretend money and shop till you drop.
Ages 4 and 5
Before heading to the supermarket, ask your preschooler to help you clip coupons. (Don’t forget to use safety scissors.) When you’re at the store, hand her the coupons and ask her to keep an eye out for the products. This will make her feel like she’s helping, and it’s an easy and fun way to talk about saving money, says Neale S. Godfrey, chairwoman and founder of the Children’s Financial Network in Chester, NJ.
Most preschoolers would rather play imaginary restaurant at home than go out for dinner. It playfully promotes a variety of skills, such as setting the table, learning good manners, and making change. “Many 4-year-olds have to be reminded after the pretend meal that they have to pay the bill,” says Dr. Singer, “but once they understand the concept, they get very excited about paying with pretend money or making change as the cashier.”
(source: http://www.parents.com/parenting/money/family-finances/teaching-kids-about-money-an-age-by-age-guide/ and http://money.cnn.com/magazines/moneymag/money101/lesson12/)