Smart Money Basics for Pre-Schoolers
While preschoolers may not be ready for an allowance, they can understand that money is something we exchange in order to get the things we want. They can also pick up on your emotions when it comes to making day-to-day financial decisions. When you express frustration at a sudden jump in gas prices or react with surprise at your grocery bill in the checkout line, your preschooler definitely takes notice.
So, when it comes to teaching preschoolers, the most effective way to do so is through example. Slow down, and think about how you budget, spend and save. Then, relay these experiences to your young children.
Here are some additional easy ways to educate your preschooler about how to make good decisions with money:
Teach with Everyday Experiences
When shopping at the grocery store, explain what you're buying and how much it costs as you put things into your cart. Ask your child to help you compare costs between brands and to look for sales. For children approaching school age, show them how you make a list and explain how it's important to try and stick to it.
For very young children, playtime can be a good time to introduce simple money concepts. Make or buy play money, credit cards, and checks and play “store” with your child. Make purchases, ask for change and let your child know that credit cards should be used with care. Even at a young age, children can understand this basic concept. Games that involve saving and trading for something else, even if you aren't using play money, are other great ways to introduce the concept.
Save for Something Small
Young children can definitely understand the concept of saving. You may want to introduce the subject by setting a small savings goal for your child. In doing so, be sure to make the first savings target quickly attainable so that he or she doesn't lose interest. From there, you can build toward larger savings goals and re-emphasize the rewards of a disciplined savings plan.
One fun approach to introducing the idea of saving is to create a savings jar. Pick something small your child would be really interested in purchasing or doing, like getting an ice cream or buying a toy car. Then, put a picture of the savings goal on a jar. Let your child contribute the family loose change to the jar at the end of each day. After a week or two, count out the results. Once you've reached your savings goal, follow through by making the purchase.
Start School and Start an Allowance
Once your child officially reaches school age, consider introducing a weekly allowance. You may even give your child a list of extra chores as a way to create an opportunity for him or her to display initiative and earn a little more money. Setting up a system like this will give your child a small level of independence as well as a chance to learn the value of hard work.
Want additional tips for teaching children about money as they get older? Visit our Smart Money Basics for Pre-Teens page for more.
