Teachings Kids About Money

kid cents

Now’s a great time to teach preschoolers about money

By Pat Blackwell, Ph.D.

While money may not make the world go around, the current financial disaster demonstrates that the economy influences us all. Some families may be coping with substantial loss and stress. Most of us are budgeting more carefully and will do without some things. As adults navigate the stress of fluctuating gas prices, inflated food and utility costs and tightening of the purse strings, children are watching and wondering about it all.

If parents are stressed, children are, too. Parents may want to use this current economic situation as an opportunity to teach about money matters and coping. And parents may want to do some soul searching as to lessons they are teaching regarding money.

Children of stressed parents will need to be reassured that they will be okay (and that they are not the source of their stress). Beyond this, appropriate lessons about finances will naturally depend on the stage of the child’s development. Preschoolers can begin by exploring currency. They can learn the amount of different coins and sort them accordingly. Preschoolers may think that pennies and nickels have more value than dimes because of their size. Experiences using vending machines provide a real world example of cost and payment.

Preschoolers learn by playing. So they should be encouraged to play “grocery store” to understand that everything has a cost. While shopping with parents in the real world, they can help make choices between items, look as prices and observe the way parents keep a list of items to be purchased. Remember, children learn their spending habits from example. If parents regularly buy on impulse, children will expect to get what they want when they want it too. If parents overvalue material things or equate money and happiness, so will their children.

Parents may want to let children in on the fact that television marketing is designed to tempt children to ask parents to buy things. Truth is, parents can either give in to this mass marketing scheme or they can “just say no”. It is okay for children to long for things they do not get. Kids who have less value their possessions more and play with them more richly.

Due to our cultural obsession with money, children can become confused about what it actually represents. For example, if parents celebrate all of their child’s accomplishments with a material thing, children fail to lean about the intrinsic value of good work. Also, if grandparents bring a gift every time they come to visit, the child learns to value the objects over the “gift” of the grandparents themselves.

Even young children can learn that money is a means of buying things one needs. It is not to be spent carelessly, but budgeted by planning and deliberate spending. They must also learn that money and “things” are not as important as people. This can lead to a simple discussion of charity and sharing. However, we must not expect a preschooler to understand fully this concept for many years.

By including children in the discussion of finances, parents can impart lessons about budget, sharing, and saving. Toddlers—and older, of course!—can learn what money represents in their family and what is does not. They can learn to live without some things—and be better for it. They can also learn that while useful, money is a means to an end. Kids of exceptionally stressed parents may need to hear that everything is okay. Best of all they can understand that more than money is needed to make the world wonderful.