6 Age-Appropriate Ways to Teach Your Young Kids About Money

It’s never too early to begin teaching your children basic life skills like responsible money management. In fact, the earlier you begin teaching them, the better chance they have of carrying those skills throughout their lives and being financially successful.

But how do you teach a three-year-old about investing? How do you help a four-year-old understand that saving money for a long period can be even more rewarding than spending their allowances on candy bars every week?

Fortunately, there are several great ways you can help your kiddos learn about finances from basic currency identification to make-believe games and couponing, let’s look at six ways you can start teaching your children about money today.

Set a Good Example

Babies are born already absorbing and learning all the information they can, and they do this most successfully by imitating those around them whether they’re learning to smile, clap, or speak. Toddlers and young children continue to learn this way by following the examples of the people around them, most notably, their parents. This is why it’s so important to set a good example for your little ones regarding finances.

If they see you budgeting groceries, paying for essentials like rent, loans, and bills, and choosing to ignore impulse shopping, they’ll learn to imitate those same skills as they get older.

Nickels vs Dimes

Two and three-year-olds have little to no concept about the value of money. This is why it’s no surprise that when faced with a choice between a penny, a nickel, and a dime, they almost always choose a nickel. To them, the nickel is bigger than the other options, and that makes it the more valuable choice. So, one of the primary skills you can teach your toddler is the value of different denominations of money.

Playing Make-Believe

Little kids love playing make-believe. Fortunately, a few of the make-believe games commonly have strong roots in financial skills that you can take advantage of in furthering their education. For example, children enjoy setting up restaurants to serve their dolls and parents uniquely inspired meals. They’ll toddle away over fake stovetops to create the perfect dishes for their diners. And when they do, you can take the opportunity to teach them how money is exchanged for their food and work.

You can do this with play money or real coins, depending on whether you want to take the opportunity to help them learn more about savings or focus on exchanging labor for cash.

The $1 Exchange

Another way you can teach your young ones about the value of money can be taught for a dollar or less while you do your regular grocery shopping.

As any parent knows, taking your child to the grocery store can be a challenging experience. Kids will ask for many different treats and toys, and even if you purchase one or two for them, there’s no guarantee that they’ll still be interested in them when you get home.

With the $1 exchange, you can take your child to a local grocery or convenience shop and give them a single dollar. While you do your regular shopping, your child will have the opportunity to look throughout the store and choose any item they want that can be purchased with the money they’ve been given. This teaches them both the value of money and how to be selective with their choices.

Let Your Kids Handle Transactions in Stores

One super simple way you can teach your kids how money and credit are exchanged for groceries and other items is by letting them be in charge of handing over cash and cards at check-out. This helps them understand that finances have to be traded for both essential and non-essential items.

Additionally, you can also have your little ones help you with clipping coupons before you head to the grocery store and put them in charge of locating your sale items so they learn to begin budgeting and how to hunt for better deals.

Piggybank Savings

A classic way parents have taught their kiddos about money for a long time has been with the use of a piggy bank. Encouraging children to set aside money they’re given in exchange for chores or birthdays and other holidays is a great way to teach them the value of savings. You can have them choose larger financial goals to work toward such as a new toy or family trip and offer to match the amount they put in when they reach a certain mark.

Additionally, having kids keep see-through piggy banks can also help them understand how much money they have and how quickly–or slowly–it grows over time.