One of the activities kids can mimic, early on, is the way we use money. In the world of plastic and online shopping, this may start to diminish (sadly), but for the moment, there are still many opportunities for children to see and understand key ideas about how money works; many great learning opportunities if you are aware of how to make them beneficial for your kids.
As a parent, you are teaching valuable lessons to your children when you explain important family, personal values and rules to live by. But you teach as much, if not more, by the things you do, the decisions you make, the words you say, and the example you set by the way you make those decisions. Even toddlers can have a keen understanding of the impact money has on your lives, and will start to develop and adopt your attitudes which will become deeply embedded quickly.
There are two key areas to distinguish when thinking about teaching money concepts to children.
First, basic money concepts pertain to the actual practical reality of money; coins/bills, their value, how to pay, where to get it, etc.
Second, the attitudes around wanting money, having money and spending money, including learning about the best and worst ways to incorporate your family values into each attitude.
Practical Money Concepts (from a child’s point-of-view)
- We have to give someone something, and they give us something in return. We give money, and we get an item.
- Sometimes there is money being returned (getting change), when the item is also given.
- Sometimes there is no more money to spend, so we can’t buy what we want/need.
- Then there are times that there appears to be no more money to spend, but parents are still able to buy things for the family
- There are times when there is money to spend, but the family doesn’t buy something the child really wants.
- Things don’t cost the same amount of money.
- You get money by going to work.
- All money doesn’t look the same.
- People talk about using money a lot.
These are typically the first concepts toddlers-through pre-K kids are noticing, and so this is the right time to introduce activities and age-appropriate lessons, to show them what’s involved. Meanwhile, remember, your children will also notice how you make decisions around money, how spending money makes you feel, and how the absence of money does too!
Parents’ Steps with Toddlers
When your very young child accompanies you to a store or bank, or anywhere that money will be used, it’s likely that you’re already showing them your money, and telling them what you’re doing: “Daddy’s paying for the orange juice and the milk right now. I give the cashier the money, and the cashier gives me the juice and the milk.”
Then share some information about the money that they’re seeing. It’s great to let them hear you mention the price, show them the coins and the bills, and eventually (either the same transaction, or the next one), tell them the names of the coins/bills they see, and talk about the numbers.
When you are home, before too much time has elapsed, let your child play with real or pretend coins/bills that are like yours (be sure they are sanitized first). They won’t need many pieces. Many parents keep a small set of coins and bills separately that their child can use to play and learn.
Teach your child a song or a rhyme to remember, play a game, or do an activity like drawing, coloring, and/or cutting out their own play money.
Let your child play without any format too, so that these new ideas can be practiced. This is when children really begin to embrace pretending, and they will likely start pretending they’re at the store, the restaurant, the hardware store, the bank, the mechanic, the hair salon, with of course, pretend (or real) money.
Your child will probably be interested in numbers so it’s a great time to start teaching them to count. They are not likely to be ready with the formal concept of adding, but giving them a piggy bank, and putting money in there repeatedly will introduce the concept anyway, and you can talk about how much money there is after each extra coin(s). They’ll eventually be ready to talk about what adding looks like.
At this age, children often want to know why a parent has to work. It is the right time to explain in simple language, why working is a good thing to do, and how some kinds of work gives us money.
Next Steps with Kindergarteners
Now that your child has some experience and knowledge of money, it’s time to ramp it up; when your child sees you using money, continue building on what they already know and move up to talking about why you sometimes get money back. “The milk cost $2 but I only had a $5 bill, so that’s more than the milk costs, so the cashier is giving me back the extra money, the difference between what I gave her, and what it cost.”
This is not likely the right time to discuss operations like subtracting, not until they understand a bit about adding numbers. Keep up with activities that are structured, to practice concepts to which they’ve already been introduced, while continuing to encourage pretend play.
When you’re out shopping together, for example, children are definitely ready to hear you talk about why you choose to buy some things and not others, when they pertain to good value.
They may not understand the specific arithmetic involved, but they are hearing crucial information on the value (monetary and intrinsic) of the items you’re choosing.
E.g. “If I buy a big pack of tissues, then each box costs a little bit less.” Or, “I only have enough money left to buy either a dozen eggs or a bag of cookies. We really need eggs, we don’t need cookies; we just want them. So I’ll buy the eggs. We can get cookies another time.”
This is Just the Beginning…
Learning about and managing money is a life-long endeavor. You’re your child’s first stop on that journey and how you set up their understanding of finances will be with them for their entire lives. We’re here to help you have those conversations with your older children, too, as well as guiding you with investing for your kids (more on that in the coming weeks!). Give our office a call today to set up an appointment.