Talking with Children about Money

Guest blogger Carol Ehlers is a Human Sciences Specialist with Iowa State University Extension and Outreach.

Wondering about the right time to talk to your kids about money? Children learn about money from many sources. Long before they enter school, they see adults using money and buying things. They see thousands of commercials each year. Like it or not, money is a part of your preschooler’s life.

What children witness affects their attitudes and how they value money. Some of these beliefs will help them as adult consumers and some will not. For example, they might get the message that saving is important or they might not.

As a parent or guardian, you will not be the only influence on what your child learns about using money. But when you daily reflect on basic lessons about money, you increase the chance that your child’s values will be similar to yours.

Simple activities and other resources, which are parent and child tested, can give ideas for:

  • Teaching how money works and what it can do;
  • Talking about how your family uses money; and
  • Modeling good money management.

Here are some tips and ideas for parents to use with their preschoolers to begin increasing their money management skills:

  • Encourage play that helps preschoolers think about money. This helps children learn about daily consumer choices. For example, play restaurant, supermarket, post office, bank, gas station or car wash.
  • Use games to help your child identify coins and values. Ask the preschooler to help you count out the money as you purchase items together.
  • Talk about work. Preschoolers can learn that some family members go to work to earn money for family needs such as food, clothes and the home. Preschoolers can learn that other family members work at home so that the family does not have to buy some good and services like laundry, cooking and yard work.
  • Share information. Talk with your child about how money is earned, paying for expenses and saving money. A good gift for a preschoolers to start learning this concept is a three part container with slots that are labeled SAVE, SPEND, And GIVE. There are some great examples on the internet.
Carol Ehlers

Money as You Grow, from the CFPB (Consumer Financial Protection Bureau) offers wonderful research-based guidance and financial learning activities for parents and caregivers of young children, and older children too.

The FDIC provides a range of resources for consumers, including free parent guides for four different age groups, including Pre-K through Grade 2, Grades 3-5, Grades 6-8, and Grades 9-12. Their page also features podcasts and games. (The parent guides are two-thirds of the way down the page).

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Books, Activities and Hard Knocks

Recently I was talking to a mother with four children. She was looking for books and activities to help her children learn about money.  I encouraged her to help them learn by doing.

• One suggestion: actually let her children practice using money – aka Spend.

• One of her children wanted to make more money; the children could do tasks outside their normal family responsibilities – making their bed, sort laundry, fold laundry and put clothes on hangers and return them to their closet. She also had her children put dishes in the dishwasher and unload it and pick up toys. Kids can Earn money in many ways – lemonade stand, sweep the sidewalk, rake leaves, weed and pick produce.

Sharing is another skill to practice: giving toys to a charitable group or clothes to Goodwill; giving money to a cause or to church. Those experiences can have a real impact; personally, I have vivid memories of my red church purse and hanky with coins in it.

• Children need to learn to Save. Hopefully parents are good examples, but they also need to set up a system that helps children save for something they want but do not have enough money for today. Long-term goals like a car or college are great for older youth; but the piggybank is a great tool for younger youth, who will be motivated by shorter-term goals – candy, toys or electronic games.

Helping children to practice making decisions about money is great experience; the more opportunities, the better, since we all learn from our decisions.  That includes making mistakes – when children have regrets about small decisions, they learn to think about consequences.  That will help them avoid making bigger mistakes as young adults.

kids-play-boardgame_300For more books and ideas on building kids’ money skills, Money on the Bookshelf from University of Nevada-Reno is a great tool:
Parent guide:

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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