Help Young Children Form Positive Financial Habits

parent and daughter putting coins into piggy bankGuest blogger and Iowa State University Extension and Outreach Human Sciences Specialist in Family Finance, Sandra McKinnon shares some compelling information on youth and financial literacy.

Children form financial habits at an early age. Parents and care providers can influence what those habits will be. University of Wisconsin-Madison researcher Karen Holden and colleagues found that habits children learn when they are young form the basis for their future behavior. A study from Cambridge University found that children form financial habits by age 7. We may teach our children that a dime is thin and worth 10 cents, but developing financial habits includes more than just recognizing coins. Parents and care providers can help children gain the knowledge and skills they need to develop positive financial habits.

The Consumer Financial Protection Bureau suggests teaching preschoolers these basic concepts:
You need money to buy things.
You earn money by working.
You may have to wait before you can buy something you want.
There is a difference between things that you want and things that you need.
Other concepts to establish good financial habits include learning about numbers, time and institutions, such as stores, banks or credit unions, and employers. Children also can learn about budgeting, regular saving and shopping strategies; social values, such as gifts, generosity and sense of community; and public goods like the library.

Teaching children about financial responsibility at an early age can have long-term benefits. As they grow older and start to manage their own money, they will have a better understanding of the value of money and the importance of good financial habits. It can also consider help with debt collectors avoid falling into debt and facing the consequences of unpaid debts. If you’re struggling with debt and are dealing with harassing calls from debt collectors, there are resources available to help. Consider reaching out to a professional debt relief service that can help you understand your options and work towards a solution that can alleviate your financial burden.

Another way to engage with children is by reading money-related books with children, and providing hands-on learning opportunities. Check out the following titles at your local library:

Sheep in a Shop by Nancy Shaw
The Berenstain Bears Think of Those in Need by Stan and Jan Berenstain
Just a Piggy Bank by Mercer Mayer
Just Saving My Money by Mercer Mayer
A Chair for My Mother by Vera B. Williams

The goal is to help children become comfortable with basic tools of how and why financial choices are made. For example, we can encourage pretend play, like a grocery store. Or we can explore careers by playing dress-up or acting out stories. In addition, we can talk about whether spending money on entertainment, for example, is a need or a want.

ISU Extension and Outreach human sciences specialists in family finance offer Preschoolers and Pennies: Read, Talk, Learn and Play, a 2-hour training for child care providers. Providers practice a way of reading with children that gives children an opportunity to become storytellers of books with a money theme. This introduces and reinforces money-related words and concepts in a more meaningful way. Complementary activities throughout the day encourage preschoolers to practice money skills.

Visit the Extension Store for the Allowance Game. Playing this game starts a great discussion on choices and consequences.

Barb Dunn Swanson

With two earned degrees from Iowa State University, Barb is a Human Sciences Specialist utilizing her experience working alongside communities to develop strong youth and families! With humor and compassion, she enjoys teaching, listening and learning to learn!

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Conversations, conversations, conversations

Dr. Constance Beecher, Ph.D, Assistant Professor, School of Education and Human Sciences Extension and Outreach shares more with us about expanding children’s vocabulary.

“Vocabulary can be developed by directly teaching new words, or indirectly through having a lot of exposure to words in books and conversations.   Research suggests a combination of both is the best approach, says Dr. Beecher.”

“Developing vocabulary indirectly through books and conversations has many benefits. Children who are read to frequently gain a life-long love of reading. The more children hear different words and understand their meaning, the better readers they will become. This is because learning to read requires an understanding of the relationship between the sounds of language (phonemic awareness) and the symbol or letter that represents that sound (phonics). The more words children know, the better they are able to understand the letter/sound relationship, and conversely, the more knowledge children have about the letter/sound relationship, the better they are able to learn new words,” Dr. Beecher.

She also suggests, “Parents can read a variety of books to and with children, and pause at words that children may not know to explain their meaning. For example, while reading “Corduroy went up the escalator.”, pause and ask “do you know what an escalator is?”. Then define: “An escalator is a set of stairs that moves you from one floor to another.” Then explain: “Last week while I was at Macys, and I rode an escalator from the first floor to the second floor”. Then relate to child: “Where have you ridden on an escalator?” – state the question in a way so that the child can say the word, or ask child to repeat word.”

Dr. Beecher reminds us that, “When having conversations, ask open ended questions (questions that can’t be answered with a yes/no). During these conversations, you can introduce synonyms. For example, you might be talking about what happened at daycare or preschool. If your child talks about making a tall tower in the block area, you can say “Oh, you made an enormous skyscraper?” “Enormous is another word for something is very big or tall”, and when a building is enormous, we call it a skyscraper. Why do you think we say skyscraper?”. This gives children an opportunity to practice the new words. Children need opportunities not only to hear new words, but to practice saying them.”

And she also wants us to remember the Non-fiction! Non-fiction or informational books are a great source of new vocabulary. When children are exposed to a wide range of vocabulary in areas like science or history, they are more prepared when they have to read these types of texts in school. See websites like this for suggestions,

Or talk with your librarian. This list of non-fiction books for ages 3-5 comes from the State Library of Iowa

Dr. Beecher says, “You can add vocabulary to your everyday activities. When you take your car to the shop to change your oil, talk about oil, engines, and other components of a car. When you go to a nursery to pick out new plants and flowers for your yard be sure to note the different names of flowers, types of grass, plants and trees. When you make a new recipe, talk about spaghetti, marinara sauce, parmesan cheese, sautéing. Use a mix of nouns and verbs.”

She says, “It takes about an average child about 12 times of interacting with a word before he or she is familiar enough with the word to use it, and many times we do not provide enough opportunities for children to get this practice.”

And Dr. Beecher’s final thoughts? “Lastly, make it fun. There is no need to sit children down with flashcards and ask them to define words. Reading and talking together will make learning vocabulary natural and fun.”

Share with us ways that you have made ‘vocabulary’ fun!

Lori Korthals, M.S.

Mother of three. Lover of all things child development related. Fascinated by temperament and brain development. Professional background with families, child care providers, teachers and community service entities.

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Let’s Read Together

From “The Wheels on the Bus” to “Goodnight Moon” and countless stories in between, a wide variety of children’s books are available to parents. The research shows that reading with your children promotes language and literacy development and improves their chances for success in school.

Books can expose children to a world beyond their everyday experiences. Perhaps your time together with books will promote a love for reading that will last a lifetime.

During September, we’ll talk about the importance of reading to children. Won’t you join us and share your own personal experiences with books?

Let’s Read Together

Lori Korthals, M.S.

Mother of three. Lover of all things child development related. Fascinated by temperament and brain development. Professional background with families, child care providers, teachers and community service entities.

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