Four Simple Ways to Teach Your Toddler About Money
My three year old found a yellow, plush stuffed duck at a boutique store. It was during the Covid-19 pandemic and we hadn’t been into a store in months. She was so sincere when she held that duck up to me, “Please mom, can I take this duck home?” Up until this moment, I don’t think she had ever asked me to buy her anything. Except maybe ‘bars’ (granola bars) from the grocery store. I stopped because I realized this was one of those ‘teachable moments’ about money and consumerism that other parents and educators were always talking about.
But I had no idea what I was supposed to be teaching her.
Beth Kobliner, author of Make Your Kid a Money Genius (Even if You’re Not): A Parent’s Guide for Kids 3 to 23, discusses why some parents avoid educating their kids about money. “Some parents are mortified by how badly they’ve handled their own financial lives and are afraid to let their kids see what a hot mess they are when it comes to money. Even parents who are in decent financial shape find it tricky to talk about money — if they talk about it at all.”
Like many parents, I don’t know everything about money. I haven’t always done right by my finances. I learn as I go. I never thought it important to talk to my daughter about money until suddenly she was staring at me with those little blue-grey eyes wanting this over-priced (but arguably adorable) ducky. I don’t want asking for toys at the store to become a habit, but I also want her to have autonomy over her choices — so where do I start?
We know our toddlers are incredibly capable. My daughter astounds me every day with things she has picked up simply by listening, watching, and best of all, playing! The great news is, that’s all it takes to get our toddlers started on a healthy understanding of money management.
Make it Visual
With so much consumption happening online or by using a credit card, it’s hard even for adults to visualize money. It’s helpful to make this abstract concept more concrete by showing our little learners what it looks like to use money.
Using a clear jar or piggy bank, let your child earn money so they can see the amount grow. If your child is one who asks for something at every Target run, let them save for it. Consider making the item something small, so they don’t get frustrated waiting to save enough money. In the article, “The 5 Most Important Lessons to Teach Your Kids,” financial writer Laura Shin explains how you can expand on this by having three jars: one for saving, spending, and giving. “Have him or her use the spending jar for small purchases, like candy or stickers. Money in the sharing jar can go to someone you know who needs it or be used to donate to a friend’s cause. The saving jar should be for more expensive items.”
Another idea is to take cash with you on your next errand or ice cream trip. Let your child help you count the money and experience the exchange. They may see green paper in exchange for an ice cream cone, but explain to them that money isn’t unlimited. If you have $5 then you can buy two cones, one for me and one for you, but we can’t also buy waffle cones because that would cost $7 and we only have $5.
Learn Through Play
Grab that pretend grocery cart or basket and go shopping! Get a few dollar bills and some coins. Tell you toddler, that bear costs $1. Can you pull $1 dollar out of your wallet? It took me all of five minutes to download and print a menu, grab a few extra dollars from my wallet and play Pizza Diner with my daughter. This also helps her identify numbers. Can you find the bill with the number one? Can you find the number 5?
Learning through play is a great way for toddlers to gain experience with money. It takes an abstract concept tangible in an engaging way and the best part is that the options for play are endless! Let them guide you with their imagination and enjoy the ride.
Read Together
Reading books is essential for all children to learn important literacy skills, but it’s also a great tool for financial literacy. My daughter loves being read to. I always know if there is something I want to teach her, I can find it in book form and use that as a jumping off point.
Better Kid Care suggests reading the book Pigs Will Be Pigs by Amy Axelrod. “Use the questions at the end of the book to discover hidden answers in the book, do a money hunt and look for money around your home or yard, or cook a meal together that might be ordered from the restaurant in the book.”
Additional books about money for young children:
- The Berenstain Bears’ Trouble with Money, by Stan and Jan Berenstain
- Money Hungry Monkey, by Paul Peters
- One Cent, Two Cent, Old Cent, New Cent: All About Money, by Bonnie Worth
- If You Made a Million, by David M. Schwartz
Teach By Example
Growing up, I remember going to benefit auctions for local schools with my family. I loved listening to the auctioneer and eating the home cooked dinners. I also remember when we waited in line to grab our dinner plate, my dad would take folded bills and stick them in the donation box. He’d usually buy one or two things during the auction. I witnessed my parents giving money for the benefit of others. I grew up knowing that was the right thing to do.
As a parent, I am realizing how much my daughter watches me, even at such a young age when it seems like all she is interested in is Cocomelon and crayons. She is listening, even when I wish she wasn’t (she didn’t hear that word from me, I swear!).
With so much of our charitable donations happening online, our children are rarely involved in this process. It is up to us to involve our children in these actions.
For example, next time you are going to donate to your local mission, try writing a check out with your child sitting next to you. They can stamp it and help you put it in the mailbox.
This is also a good time to discuss the difference between wants and needs. Chelsea Brennan, creator of SmartMoneyMamas says, “Monkey see, monkey do is crucial for children’s learning at this age. Think out loud and discuss your spending decisions. They don’t need to understand, or really even be listening to you, but consistently hearing you differentiate between wants and needs will sink in as a normal practice.”
“It may feel awkward talking to your three year old about money when you feel uncertain about it yourself. Don’t overthink it. You don’t have to know everything about money to help your child have a healthy financial future.”
Recently, my kids and I went to Target to stretch our legs and pick up a few items from our grocery list. As we were leaving, my daughter pointed out some small baskets. I said, “Wow, only $5!” I was, in fact, quite tempted to snag the baskets. Instead I said, “Well, we already got what we needed off our list. We don’t need the baskets, but we do need the milk and crayons we bought. It’s fun to look, though!”
The next time I go to a boutique shop with my daughter, maybe she’ll have her own money saved up. I’ll feel prepared to talk to her about where the money comes from and why it’s important to keep it safe. It may feel awkward talking to your three year old about money when you feel uncertain about it yourself. Don’t overthink it. You don’t have to know everything about money to help your child have a healthy financial future. Making conversations about money a comfortable topic and exposing them early will set a solid foundation for our next generation of money managers! Maybe in twenty years they will even take us out to dinner! We can only hope, right?
