Teaching Basics of Money Early

How do you start teaching young children about money? You talk to them in simple terms and work with examples that can make sense to them.

At early ages you’re not prepping them for an economics degree, but you can at least start talking to your kids about the importance of value and saving. The bigger stuff can be introduced as they grow up.

• Talk to them generally about how you work so you can make money to buy things you and your family need or want – such as groceries, school clothes, or vacations. Then give them a regular allowance or pay them for doing certain small chores around the house so they can see what money looks like and how they can earn a little.
• Tell them about saving money you earn and then using it to make purchases or pay bills. Show them how they can save too. Have them put their money in separate jars or piggy banks – one for things like inexpensive toys or books; one for more expensive things such as a cool pair of shoes; and maybe one that could be used on gifts for others. A clear jar will let them see the money they add, or a full piggy bank will weigh more over time.
• As they save their money, talk to them about their coins or paper money and count it with them on occasion so they know their savings grows. “Look, you have 4 dollars! Last time we only had 3! One more and we can get that toy you want.” Let them know that even you have to wait to buy things.
• When you take your kids to the store, talk with them about how much some of the items they like cost. That can help them understand that they have more or less than that at home. “All you have to do is save 2 more dollars and you could buy that!”
• Take them to the store when they have saved enough money to buy something they want, then let them pick the item out and hand their money to the cashier so they'll be excited as they learn the value of “this money for that thing.”

You could even start teaching them a little about loans - how you sometimes need to borrow money if you promise to pay it back. “I know you have 6 dollars at home, so I’ll loan you the money now, and you can repay me with 6 of your dollars when we get home.” And when you get home, let them give you that money from their bank.

Teaching your kids about money when they’re young can help them on the road to responsibility as they grow up. Those little tips can make a big difference.