Introducing money management to preschoolers

Autumn has a great idea for teaching preschoolers about money:

The best way to start out is to make money as concrete as possible. When my children were first given an allowance, they struggled to understand that $1.00 was the same as four quarters. So, we made a handy conversion chart for them using a flat cardboard box. Inside, on one side we glued a dollar, a quarter, a dime, and a nickel. On the other side we glued four quarters, two dimes and a nickel, two nickels, and five pennies. The side-by-side comparison showed the kids how to exchange their bills and coins for other denominations. It took practice and parental support, but they eventually got it. Making money concepts concrete really seemed to speed up the process for them.

If you're looking for a little more guidance, the folks behind the Portland-based Tessy & Tab Reading Club have put together a fabulous Preschool Money Manager Kit. It includes an array of colorful charts and lists (all printable from the web site, by the way), three Tessy & Tab books about basic financial topics, and a seven-step parent guide, and a sturdy cardboard save/spend/share bank called the Moonjar Moneybox kids make themselves.

I can't say enough about this little kit. It's well-designed, the advice is sound and encourages independence, and it does a perfect job of taking abstract ideas and long-term goals and making them concrete. I think it's a great value at $24.95. And while they peg the age range at 2-6, these concepts are good for just about any kid and parent. I intend to use it with my kindergartner (That's right! She's no longer in preschool!), and I'm sure my 3rd grade son will love it, too (he can't wait for her Tessy & Tab books to come in the mail). A great product, and an awesome gift.

Win it! Wayyyyy too long since we had a fun giveaway. Judy, the very kind co-founder of the company, will gladly send a Preschool Money Manager Kit to one lucky Parenthacker! To enter, leave a comment with your answer this question:

How have you taught your kids about money (so far)?

If your child isn't yet allowance-age, just give us your best tip from childhood, or anything else you think is relevant. I'll pick the winner at random tomorrow at 5pm PST. Good luck!

Comments

[Julie]

Our not-quite 2 year old just told me that he needed money before we went to Target so I made him some pretend dollars, quarters, and pennies (because he uses them to ride the horse at the grocery store). Once he understands a few more numbers, we will talk about how many dollars it takes to buy x.

My parents never really talked to me about money and I have terrible money management problems to this day. We hope to correct this with our son.

[Beth/Mom2TwoVikings]

We finished the Dave Ramsey Financial Peace U in December. We immediately made up a little chart with 2-3 things per day that my 2 and 4 yr old could do each day to earn money...clearing the table, bring me the garbage cans from all over the house to be empties, to empty the silverware from the dishwasher into the drawer, things like that.

Each task was worth one quarter with the possibility to earn about $3 per week. The first dollar ALWAYS goes to church; everything after that is theirs. We haven't started making saving mandatory yet.

They also have the option to refuse to do their tasks - hopefully the lesson being "no work, no money" LOL

My two year old has somehow managed to already figure out the very minimum number of things he has to do to give his $1 to church and have exactly enough for one bag of candy per week! LOL

My 4 yr old seems to love it and this system has taken the struggle out of "can I have that?" and "can I have that?" every time we go somewhere. I simply say "did you bring your money?" and, if not, that generally settles it.

One other interesting observation: the first time my 4 yr old had earned $2 to spend at the local Dollar General, it took her (no lie) FORTY-FIVE minutes to pick out just the right thing since it was HER money she earned and she was spending. LOL

My four yr old has also become an awesome sale/clearance bin shopper! LOL She already knows that she can get more for less by shopping where the "special" signs are! LOL

[Beth/Mom2TwoVikings]

We finished the Dave Ramsey Financial Peace U in December. We immediately made up a little chart with 2-3 things per day that my 2 and 4 yr old could do each day to earn money...clearing the table, bring me the garbage cans from all over the house to be empties, to empty the silverware from the dishwasher into the drawer, things like that.

Each task was worth one quarter with the possibility to earn about $3 per week. The first dollar ALWAYS goes to church; everything after that is theirs. We haven't started making saving mandatory yet.

They also have the option to refuse to do their tasks - hopefully the lesson being "no work, no money" LOL

My two year old has somehow managed to already figure out the very minimum number of things he has to do to give his $1 to church and have exactly enough for one bag of candy per week! LOL

My 4 yr old seems to love it and this system has taken the struggle out of "can I have that?" and "can I have that?" every time we go somewhere. I simply say "did you bring your money?" and, if not, that generally settles it.

One other interesting observation: the first time my 4 yr old had earned $2 to spend at the local Dollar General, it took her (no lie) FORTY-FIVE minutes to pick out just the right thing since it was HER money she earned and she was spending. LOL

My four yr old has also become an awesome sale/clearance bin shopper! LOL She already knows that she can get more for less by shopping where the "special" signs are! LOL

[Holly]

so far my 3 year old knows that if she finds coins on the side walk, she can put them in her piggy bank. and then wash her hands. and my 1.5 year old knows not to put coins in her mouth. most of the time.

[PsychMamma]

Our daughter is 2 and a half and she LOVES paying for things. When we go to Target, I sometimes give her a dollar and we pick something out from the dollar spot and talk about how much things cost. She understands more and more that you have to give money to get something at a store, and sometimes things cost more than you have. ;-)

She also thinks all we have to do is drive to the bank and "push the buttons" on the ATM to get more money. I wish.......

I love the idea of a spend/share/save bank and want to incorporate that into our teaching. Now is probably a good time to start. Thanks for a great link and giveaway!

[Rachel]

My daughter has a piggy bank that she puts all of her money in, but she hasn't quite gotten the money idea yet.

However, we have been teaching her economy with the "screen time" ticket hack:
http://www.parenthacks.com/2007/05/ticket_system_k.html

We give her 4 tickets a day. The first couple days after we introduced the ticket system she burned through all of them and then whined for the rest of the day. Since then, she has learned to save some for the end of the day. We will soon switch to a weekly distribution system.

The funny thing is that she refers to money as "tickets."

[Lori]

We have been discussing that we should probably start teaching our 3yr old about money. About the only thing my parent's taught me about money was that they helped me open a checking acct when I was 16 and taught me how to balance my checkbook. I somehow came through with good money management skills, but my sisters are horrible about money management! We want to be better with our kids about teaching them.

[Daffodil]

Reading some of these comments, I realize we need to get on the ball with our son! He'll be two next month, and his only concept of money is the loose change we leave for him next to his piggy bank so he can have the fun of dropping the coins in. We do take the pig to the bank occasionally, and, because he's so young, every single cent of it goes into his college fund. When he's older and starts understanding money, we'll make it a 50-50 split, college fund and "fun" money. That's how my mom was with me with my jobs in high school -- half was for college, half was for me. It was good practice for saving as an adult!

But I could really use this kit. My husband and I are both good with money but I'm not sure how to teach that to our son.

[Betsy]

We talk about money and choices a lot. We were JUST talking this weekend that it is time to take it to the next level. We are very lucky so far that neither kid has ever asked for anything by name yet. (3 and 4 year old boys).

[Fauna]

When I am out shopping with my 4 year old I try to teach him how to get the most for the dollar. When we are looking at snacks, he may want the Cars fruit snack but I will show him that another brand might be cheaper (or we can get more for slightly more). If he insists on a particular brand I tell him that we will have to wait until it goes on sale. This is what I try to do with most everything, but when you get to toys that's another ballgame and I just say no or maybe he will get something like it for his birthday or Christmas.

[Josie]

This sounds like a great system! The other day, I found my husband trying to teach our 2yr old about commodity futures. Seriously. I told him that we need to teach her about nickels and dimes first. We obviously need some help here!

[uppervalleymom]

We've got a "commission chart" (ala Dave Ramsey's Financial Peace Jr kit), and encourage the kids to earn extra money with extra chores. We also have then help with grocery shopping and couponing!

Could always use new ideas for our 3, and would love to see this kit. Thanks!

[mom2gandc]

My 2.5 year old loves to pay for things, and has a piggy bank which he will put found money in. He doesn't really get the different denominations yet, but understands that the big shiny quarters sometimes work in fun machines :)

[KKyle]

We're just starting him with the cash register so far (2yrs)...

He's interested in money... so we'll probably ramp up soon...

[Autumn]

I like this kit because of it includes the "Share" category. When we started an allowance with my children we felt strongly that Saving and Sharing had to both be taught. It has been pretty successful for the most part. The other success has been planning and saving for a short-term goal. They pick something they have been wanting and then save up for it. This has been crucial in letting them feel in control of their money and have a sense of pride and accomplishment in managing money well.

[Laree]

I haven't done much with my little ones, but I remember clearly some lessons from childhood. I remember the time that my Dad brought home the entire paycheck (he was paid once a month) in cash. He divided it among the 4 of us, and had us pay all the bills. One by one - the house payment, charity, electricity, phone, gas, food, car funds, everything we could think of. I think we ended up with like $20 left over. It really sunk in that when my mom would say we needed to save up for something, we understood where she was coming from. Looking back at things, I think my Dad may have padded some of the costs so it looked like we had less at the end, but the idea WORKED for sure.

[Cindy]

we're just starting w/ my 2 year old -- letting her carry money and "pay" for things. Although she does have a activity "tote book" that has a "credit card" that she likes grabbing and using -- hmmm... maybe I have to use cash a little more!!

[Adam R.]

Our eldest two (of 3 girls; 4.5, 3, almost 1) haven't expressed any interest in having their own money yet (thank goodness, because when they hit their teens, I'm doomed). But my wife and I have already talked about using the 80-10-10 approach (80% to spend, 10% to save, 10% to give to church/charity). I, for one, did not get much training about money management from my folks and as a result I fairly suck at it. I've struggled to gain control of my spending habits to reform our family finances and I want to give our children the tools they need to avoid this situation.

[Becky]

I've started buying groceries with cash to keep me within my budget, but I use our credit cards as debit cards a lot because of the rewards. I make a point of telling my 2yo dd that the cards are telling money to be taken from our bank account just like when I take the dollars from the ATM.

[Michael]

We are teaching our 4 year old using banks. He has a ceramic pig bank for quarters and a money jar that count money for the rest. I empty out my daily cahnge on the counter for hin to "find" and ask me if he can put them in his banks. This is allowing him to learn to pick out different coins while learning what each one is worth. We are working with coins now. Next we will do a chores list for coins. We have a bag of items he can buy from so he doesn't think he can always buy something at the store every time we go.

[jdp]

Oooh! If I don't win it, it will be a good birthday gift!

How I've taught him about money?

Well, a few different ways but I think the most long-running "bit" is just me, being probably more transparent than the average parent is about money.

I let him see me work with the budget on the computer. I let him see me put the grocery money in an envelope labeled "groceries" and put a few bucks in the one labeled "fun" last.

The only part he doesn't see is me moving things around savings. But he has his own piggy bank.

He also has monetary consequences. If he breaks a friends toy, the $ to replace it comes from his piggy. Stuff like that.

He just started Kindergarten but I'd love for him to see this kit.

At one point I considered getting him this:

http://www.babyscholars.com/mosapiginpis.html

Then I realized he HAD 4 piggy banks so we just have diff ones for diff "accounts". Not very meshed though.

[Ginger]

For their birthdays, our kids have the choice of either a birthday party or $10 per year old they are (example, my 9 year old just got $90). We have them pay 10% to our church, and the rest they are able to spend. We talk about what they would like to buy, how much things cost, and then they are able to narrow down their choices. We encourage them to put a little money in the bank too, in case down the road there is something else they would like to buy, and don't have enough at the moment.

[Shara]

Very interesting ideas! I have a four year old that I have been trying to introduce the idea of saving and planning to. I hate to say to him "Mommy doesn't have the money." or "I can't afford that" because that isn't always true and even if it is it isn't really the words I want to use to explain the saving process or spending process to him. Hopefully I can help teach him how to best use his money wisely.

This kit would be very helpful! I'm also keeping some of the comments in mind - lots of great ideas!

[Michele]

I have three children ages 7, 5 and almost 3. All but the 7 y.o. believes that our debit card hold an unlimited amount of money, and I think that's simply because our eldest understands basic math principles. All of our children are given allowances every week that they fulfill their responsibilities (posted on a the fridge as a reminder). My eldest will save her money and has wads of cash stuffed in her purse. My 5 y.o. begs to take her money to the 99-cent store and buys junk. My youngest, usually loses his coins in the house. I definitely need a consistent system - help!

[Duane]

All my kids (now 6, 4 and 2) have and understand the "piggy bank", up to and including searching the house for randomly dropped coins. The oldest understands that she is often given money for birthdays, Christmas, etc, and has recently learned how to total it up and decide what to buy.

I've got a what NOT to do. DON'T feel like making the child spend their own money is somehow bad, and that you should always buy it for them. My wife and I are still having this "discussion" (ahem) and she insists, even when my daughter spends her own money, on paying half. I keep arguing that you're just teaching her that things only cost half what they are actually worth, but I keep losing that battle.

Also, when they're old enough, let them buy lunch at school. As long as my daughter keeps referring to the price as "two dollars and one quarter" I know she hasn't quite gotten the hang of it yet.