Research has shown children learn the most about money from their parents. They watch parents spend or save money every day (observation). They also hear their parents talk about money either directly or indirectly (talking it over). And children learn about money by using it themselves (learning by doing).
Children see what their parents and other adults do with money and they start to understand how their parents feel about it. In turn, this influences how children feel about money. Do parents spend all their money before it’s earned? If so, this may make it hard to teach children about limited resources, planning for spending, and the value of saving. Or do parents save every cent they earn? This attitude may make it hard for children to see that money is a tool, not a goal in and of itself, and can make it difficult for children to spend even for necessities.
Talking It Over
It is important to discuss the family’s financial situation with children at a level appropriate for their age. Encourage children to participate in family financial discussions. Communicate about money one-on-one as the opportunity comes up. For example, daughter wants to buy a digital camera. Her parents tell her they can’t afford it. Then the next week, the parents buy a new vehicle. What does daughter think? Help her understand why it is important to have the vehicle to drive to work and why that need must come before buying her a camera.
When talking about money and saving with children, encourage them to set goals that can realistically be reached in the near future. Saving money for that new camera is more realistic than saving for retirement at the young daughter’s age since retirement is so far in the future. Remember kids live in the present.
Also, be reassuring when talking to children about money. If they discover the house they live in is not completely paid for, they may worry. Assure them the family is able to make the monthly payments and they will not be out in the street by morning.
Learning by Doing
Ideas for actual activities to be done with children to help them learn about using money are described below. Choose activities that are appropriate for the child’s age and current interest:
Use play money and “price” a variety of items to help children practice using money.
Make three banks from jars, boxes or other containers. One bank would be for money to share, a second for cash to spend, and a third for savings.
Make A Savings Plan
Develop a simple savings plan for something they wish to buy. Create a storybook with younger children. Ask them to draw a picture of something they want to buy. On the next page ask them to draw the amount of money they think it will take to buy the item. On the third page have them draw how they are going to find the money they need (either earn it or save it). On the final page have them draw something that shows when they actually will be able to buy the item they want.
Comparison-shop together for an item they want to buy or for a major item for the family.
Allow children to make simple cash transactions at the store. Talk about the experience after they are done.
Family’s Money Heritage
With extended family such as grandparents or aunts and uncles, discuss the family’s money heritage using questions like the ones below.
Were ancestors poor, rich, landowners, laborers, teachers, entrepreneurs, etc?
- What kind of house did they live in? What other possessions did they have?
- What kind of gifts did they give for birthdays, holidays, etc?
- What did they do for entertainment and how much did it cost?
- What kind of transportation did they use?
- Are there any stories of times when they gained or lost money? How did they cope?
Play a values clarification game. Place the sign “Agree” on one wall and the sign “Disagree” on another wall.
Read the following statements to children and ask them to move closer to the sign they feel represents what they value for each statement. After they move, ask them to explain the choice they made.
- Everyone should have a checking account.
- ATM or debit cards are not safe to use.
- It is not safe to buy things on the Internet.
- Using credit cards only leads to deeper debt.
- Credit cards are a connivence.
- All children should receive allowances.
- Only older children should receive allowances.
- Everyone should own their own home.
- Only married people should own a home.
- Only a family should own a home.
- Having a nice car is the most important thing for a teenager.
- Teenagers should pay all expenses if they have a vehicle.
- We should all plan the next family vacation.
- Only parents should plan family vacations.
Have A Money Discussion With Children
Ask them what the following figures of speech mean:
- Saving for a rainy day
- Nest egg
- Do you think I’m made of money?
- Money doesn’t grow on trees.
- A penny saved is a penny earned.
- It is better to give than to receive.
- The love of money is the root of all evil.
- Don’t spend it all in one place.
- Easy come, easy go.
Leanne M. Manning, Extension Educator, Carla J. Mahar, Extension Educator, and Kathy Prochaska-Cue, Extension Family Economist
(This article was originally published by Manning, Mahar, and Prochaska-Cue in a NebGuide. It is re-published here with permission.)
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