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How to Teach Young Kids About Money

How to Teach Young Kids About Money

May 17, 2021

Teaching your kids about money can start at a very early age. We recommend starting at age 3 or 4 (when they start learning how to count) because it is at this early stage when they can begin to learn some very basic concepts about the value of money. This will give your kids a jumpstart in learning how to manage it more effectively later on in life.

Here are some important money concepts your child will begin to understand at an early age if you teach them:

  1. The value of money
  2. The power of giving / generosity
  3. How to save

Would you not agree that those three values are things that even most adults aren’t able to fully grasp? By starting them young, you can provide your kids with a true gift that will be helpful to them in all stages in life.

Here are some ideas behind how to do that.

1) Give your child money to spend on others

This can start as early as 3 years old. At that age, there’s likely not been enough cognitive development to understand the concept of earning money, but your child can still begin to understand the idea behind giving.

One idea is to teach them how to give things that they can see value in. Around Christmas time, give your kids money to spend at the toy store to buy gifts for other kids and explain to them how this is a way we can help others by showing kindness.

When you reach the checkout lane, give your kids the cash so they are the ones to give the money to the cashier. It teaches them that, in exchange for the money provided, they get to bring home the toys to give to the children. This exposes your children to the idea behind an exchange.

Then take the toys that they picked out and physically drop them off at a homeless shelter. This will be a powerful act of giving and the child, though they may not understand it fully, will begin to grasp the concept of sacrificing something of value for the happiness of others. Teaching your kids to think of other kids’ happiness is invaluable to their development.

2) Make them sacrifice something for money

If you have your child do household chores, or study harder for good grades, and then reward their efforts with cash, it teaches them that with the sacrifice of hard work comes a benefit. This teaches them to always give their best and they’ll be rewarded for it. As mentioned earlier, cognitively your child is probably not quite ready to understand this real early on, but you can begin to do this probably around age 5 or 6.

3) Use money in counting exercises

One of the best things you can do when they are learning math is to use dollar amounts in examples.

My girls love to make-believe. When we go to the playground, they make-believe they are running a restaurant, or starting a puppet show. I always ask them “okay so how much will this puppet show cost me?” Their answer is typical to a 6- and 3-year-old: “that will be eleventy-three dollars please, sir”.

And yet, while their answers make no sense, I’m still planting the seed that life is full of exchanges. If they are going to give me a make-believe pizza, or provide an entertaining puppet show, they should expect to receive something in return.By the way, the byproduct of this is self-confidence. Most parents want their kids to have a giving and generous spirit, but you also want them to know their worth. If they are going to provide something of value to someone else, it should generate some sort of value in return.

So, there you have it — 3 ways to teach your young kids important money concepts. It is almost never too early to begin. Good luck!