How to Talk to Young Kids About Money

Knowing how to introduce your child to the concept of money depends on his/her stage of development. Matching age appropriate play with a money theme can be very effective. It’s probably best to begin once your child starts to recognize numbers, around preschool age (three to four years old). These early lessons should be very simple and concrete; what does money look like and what does it do.

Preschoolers: Fun with shapes, colors and sizes
Your preschooler is learning how to tell the difference between shapes, colors and sizes. Sorting helps children see things in categories and develop fine motor skills. You can build on this with money, which can easily be sorted in “categories.” Make a game out of matching and stacking coins and bills, pointing out their differences and similarities. Take turns picking similar coins or bills out of combined piles. Correct matches get praise, high-fives and an extra turn. You may be tempted to reward with money, but be aware that children at this stage don’t understand that money has value.

Primary School Age: Grown-up decisions with lunch money
Kids at this age often want whatever their friends have, but don’t realize that things cost money. Begin the lessons about spending on the basics utilizing their need for schoolmate approval. Have your child buy a school lunch one day instead of bringing it. You can go over the menu the night before and help your child decide what they can buy, but don’t be surprised if they don’t follow your advice. In fact, count on it. Leave it up to them to make their choices and live with the consequences. Talk to them about their choices and discuss their decisions in a positive manner.

Above all, setting a positive example is always the best way to teach children, about anything. Putting your own financial house in order is not just good for you, it will set a solid foundation for generations to come.