Birth of a Consumer: How to Teach Your Preschooler About Money
by Philip Heckman
Children are born learners. In the first five years of life, children pick up a tremendous amount of knowledge about themselves and their relationships to other people and the world around them.
One area of knowledge children gain through observation and experience is how people exchange material things. The role of money in that exchange clearly is important, but the rules sometimes are mysterious. By age five, most if not all U.S. children see money being spent. Fewer see money being saved or given to charity.
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. Unfortunately, most parents feel almost as anxious about discussing money with children as they do about discussing s-e-x. Yet four of 10 parents believe children should start learning about money before they're five years old.
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. For example, if your child is watching you get cash from an ATM (automated teller machine), you can use the moment to explain that you had to put money into your account at the credit union before you could use the machine to take money out of your account. Explain that that is why there is a limit to how much money you can get.
Know when the moment is over
A preschooler's attention span is pretty short--perhaps no more than 10 or 15 minutes for a particularly absorbing activity. Make the activity as interesting as you can, and end it when your child's mind wanders. You can pick up the activity again later during the next teachable moment. A series of small steps will have a greater effect on a young child than a formal lesson.
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?" Instead of: "Did you pay the woman?" ask: "What happened when you took the toy to the checkout counter?"
Be flexible
As you use teaching resources you find in the library or online look for ways to modify them to fit your child's interests and abilities.
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 (although, for example, a child typically will learn the names of coins before he learns their values). Whenever these topics come up, try to connect them with ideas you have discussed with the child earlier. Allow children to make mistakes--they will learn more from actually losing money and making disappointing purchases than from warnings about those possibilities.
Engage all the senses
Children are in tune with all five of their senses. Look for ways to present ideas using pictures, sounds, touches, smells, and tastes to keep learning exciting and memorable. The best lessons allow children to have fun using their hands and voices.
Keep it simple
Explain only a little at a time. When you have satisfied your child's interest, change the subject and wait for the next teaching opportunity. Knowledge builds from small insights over time, reinforced by repetition, especially when you make suggestions rather than lecture and encourage instead of criticize.
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.
Apply discipline
The sight of a child throwing a tantrum in a store aisle is familiar. As upsetting as the episode can be, it also is the sign of an opportunity to teach limits. If it is your child, deal with her behavior by gently and firmly removing her from the store until she calms down. Then describe the behavior you expect and the consequences for a repeat performance. Remind her of these limits before each shopping trip. Set and apply consistent rules and stick to your decisions.
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.
Consider an allowance
When children are ready to make money decisions (for example, when they can tell coins apart, can count, and have chances to spend), consider giving them a regular allowance that they can practice with and learn from.
Reassure your child
Children know that money is important. You have to put it in perspective. Remind your child that you always will provide what he needs to live and be safe, such as food, clothing, and shelter, especially in times of crisis, such as a death in the family or the loss of a job.
You'll find a set of free activities you can use to teach preschoolers basic money lessons at www.creditunion.coop. Look for Thrive by FiveTM: 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.
Philip Heckman is director of youth programs for Credit Union National Association.
April 18, 2005
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