How families use money can influence young children
into adulthood. At one extreme, children can become financially secure
adults, while at the other extreme, they can grow up to live
paycheck-to-paycheck in a state of constant financial anxiety.
Here are some ideas for helping your preschool-age child develop
healthy, productive financial attitudes and behaviors:
Look
for the “teachable moment”
Learning takes place every day and does not require a classroom or a
formal lesson. Educators refer to the teachable moment as the time when
a child is open to a new idea. Be alert for your child’s questions and
comments that let you take advantage of her curiosity to teach about
money.
Ask “open-ended” questions
Questions that have single-word answers--“close-ended,” yes-no
questions--do not encourage further discussion. They force you to keep
asking more questions. Open-ended questions, which are less likely to be
answered with a single word, are more productive because they encourage
conversation. Instead of asking: “What color was the man’s uniform?”
ask: “How could you tell the man was working?”
Build on past learning
Children learn at different rates. There is no “right age” to teach any
particular money concept. Financial questions can come up at any time
and in any order. Whenever these topics come up, try to connect them
with ideas you have discussed with the child earlier.
Read together
Books can be a big help in explaining the often-puzzling real world to a
child. Read to your child daily and use the public library as a doorway
to his interests and for some great stories for preschoolers about
money.
Play together
Play is one of the most important parts of childhood, during which
children try to mimic and make sense of the world. Playing grocery store
and other activities with children not only teaches them basic money
concepts, but also reveals what they don’t yet understand and might be
ready to learn.
Plan together
Involving children in planning for family events helps them learn to be
responsible for wise spending. A child who has some say in where to go
on vacation and what to do there is more likely to accept spending
limits.
Set a good example
Let children see you doing the things you want them to learn, such as
making plans to save for a goal and accepting spending limits.
You’ll find a set of free activities you can use to teach a preschooler
basic money lessons at
www.creditunion.coop. Look for Thrive by Five: Teaching Your
Preschooler About Spending and Saving. You can download the activities
and other teaching resources at no charge. If you don’t have online
access from home, you can use the Internet from your local public
library.
Copyright 2005 Credit Union National Association Inc.
Information subject to change without notice.
Taking the time to teach your
children good money habits now, will benefit them in the future.
Children who are not taught about money end up paying the consequences
later on in life. Many parents don't talk to their kids about money
because they think they are too young, don't have time, or feel they
don't have enough money. It's very important that parents take the time
to teach children about money regardless of what their income may be and
that they start at an early age. Below are some helpful guidelines and
suggestions you may follow along with some activities you can use
to teach your child the ABC's about money!
Based on childhood experiences, many people
tend to have different feelings and opinions towards money.
These experiences, values, and beliefs will probably differ
for each parent. It's important that parents talk about
these feelings and come up with an approach as to how they
will teach their children about money. Here are some
questions you should consider that should help you focus
your discussion:
* How will we create an open environment in
which our family can discuss money issues?
* How should our children receive money?
Will we give them allowances or use another method?
* What are our family values and attitudes
about money that our children may be observing?
* What do we communicate about money?
* How will we structure learning experiences
about money?
* How will we deal with our children's
differences in handling money? By stage of development,
special needs or personality differences?
* How will we respond to the effects of
advertising and peer pressure on our children's buying
requests?
Before you begin, you should keep the
following guidelines in mind:
* Guide and advise rather then direct and
dictate.
* Allow children to learn by mistakes and by
successes.
* Encourage and praise rather than criticize
or rebuke.
* Be consistent while taking children's
differences into account.
* Include all family members in money
management discussions, decision making, and activities as
appropriate for their age.
* Explain to children what they can and
cannot do and the consequences of violating the limits.
* As children get older increasingly include
them in discussions of limits and consequences.
* Expect all family members to perform
unpaid, routine household chores based on their abilities.
* Express your desire to have things you
can't afford. Children need to know that parents say "no"
to themselves, too.
Teaching children about money is more than just
preparing them for employment or how to save. It involves
teaching them the positive and negative meanings about money.
For example, children need to know that while it's nice to show
people you care by buying a gift, you can also show someone you
care by actions and words. There should be open communication
between parents and kids about feelings, views, and opinions
towards money. This will help the child understand that
conflict does occur with money and that it should be discussed
within the family. In many circumstances a compromise is
necessary.
Children learn mainly through observation and
example. Through observation children learn much more than
parents think. Parents can add to this observational learning
through intentionally planned learning activities. As you teach
your children about money they will learn about responsibility,
family values and attitudes, decision making,
comparison-shopping, setting goals and priorities, and managing
money outside the home.
When teaching your children about money,
focus on these money concepts: earning, spending, saving,
borrowing, and sharing. You can begin to teach most of
these concepts when children start to talk in sentences.
Borrowing and sharing will probably come at a later date,
probably later on in elementary school. They require the
ability to understand math and other's point of views.
Earning teaches:
-A sense of freedom
-Financial independence
-Work standards and habits
-How to evaluate job alternatives
-Relationship of money, time, skills, and
energy
Spending Teaches:
-Difference and balance between wants and
needs
-Opportunities for comparing alternatives
-Making decisions and taking responsibility
for them
-Keeping records
Borrowing teaches:
-Cost of borrowing
-Borrowed money needs to be paid back
-When it is appropriate to borrow
-Consequences of buying now and paying later
-Structure of borrowing
-The idea of credit limits
Sharing teaches:
-Good feelings for giver and receiver
-Helps other people
-Doesn't always require public recognition
-Obligations to give money to certain
organizations, i.e. taxes to the government
-Giving of yourself rather than giving money
or gifts.
This is an exercise designed to help you
evaluate what you are or are not doing to teach your
children good money habits for life. The stage of
development of the child will dictate how involved you get
with the topics presented in the questions. Use the
development chart which follows to guide you in deciding
about the level of involvement.
Yes
No
1. Do each of my
children have some money to manage without my interference?
2. Have I helped
my children set up a spending and saving plan?
3. Do I avoid
using money, as a reward or punishment?
4. Do each of my
children do some regular household chores?
5. Do I set a
good example by being truthful about money matters?
6. Do I give my
children more financial responsibilities as they get older?
7. Am I a good
money manager, giving my children a good example to follow?
8. Do I allow my
children to make their own decisions about money when there
are alternatives?
9. Do I praise
my children if they have made wise decisions with their
money?
10. Do I help my
children find ways to earn extra money that is age
appropriate and suits their abilities and skills?
11. Do I allow
my children to make mistakes related to money and help them
to understand consequences?
12. Do I
sometimes verbalize my own desire to acquire more goods and
services than my income can handle so that my children know
that I say "no" to myself, too?
There are many activities you can do to teach
your children about money. Here are some suggestive
teaching activities for your preschoolers, elementary kids,
and teenagers.
Preschoolers
Elementary
Teenagers
Play grocery store or bank with pretend
money.
Borrow or rent something they need to
return.
Have children do unpaid chores, like
setting the table or putting away toys.
Read stories about money
Teach children to check prices in newspapers
and catalogs before buying.
Help establish the amount of their
earnings to be saved and why it's being saved.
Play Monopoly or Pay Day games.
Plan how to share the cost of an item
they cannot afford from their earnings.
Open a checking account and help them balance
it.
Help them understand the use of cash and
credit.
Help children return an item or write a
letter of complaint about an unsatisfactory item.
Allow participation in family financial
discussions about what to buy, how to save more, and how to
cut expenses.
References
Crary, E.1990. Pick up your socks.
Parenting Press: Seattle.
Danes, S.M.1991. "Money, kids, and
allowances." Young Families Newsletter. 100. Minnesota
Extension Service: St. Paul.
Danes, S.M. 1992. Parental perceptions of
children's financial socialization. In Proceedings of the
Association for Financial Counseling and Planning
Education. Edited by D.R. Iams, Charleston, SC.
Danes, S.M. 1992. Allowances and
Alternatives. FO-6117, Minnesota Extension Service: St.
Paul.
Felder, L. 1990. "Moneywise kids: Teach kids
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Hogarth, J.M., J.Swanson and M. Lino. 1983.
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Mills Morrow, A. "Money Management" Lesson I
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Waddell, F. E. 1985. Money and your children.
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Look
for the “teachable moment” 
