How Do I Teach My Toddler About Money?
As an accountant and a mother, I often think how should I teach my kids about finances? I currently have two small kids, one is 3 and one is 5, and I’d like to share some of the simple things I’m currently doing, to hopefully give my kids more information than I had!
When teaching your toddler about money, it’s important to keep it simple, talk about it frequently, make it fun when you can and focus on setting the foundation for additional conversations and lessons as they get older.
This site is a participant in the Amazon Associates program, as well as other affiliate programs. As an Amazon Associate, I earn from qualifying purchases. This post may contain some affiliate links for your convenience.
I have an MBA, I am a Certified Public Accountant (CPA), and have almost 15 years working in finance and accounting. These are my opinions based on researched facts and my understanding of those facts. However, this is not legal, financial, or tax advice. If you need legal, financial, or tax advice, you should reach out to a professional for a 1:1 chat! All opinions are my own.
1. Talking About Money with your Toddler
This may sound silly, but just talking about money with your toddler. At dinner, we go around the table and ask everyone how their day was. When my husband and I share what we did, we let the kids know we went to work. I will ask them “Why did I go to work”? They now mostly know the answer is to make money! Then we will talk about the kinds of things we need money for – our house, our car, our dinner, our clothes, etc.
2. Explaining How Much Things Cost
Explaining to kids how much things cost can also help. I don’t do this with everything, but when situations naturally arise and are age appropriate. For example, my 5-year-old now spends a lot of time on his tablet. Occasionally he will want to buy an app. I let him spend a nominal amount maybe $3. When he asks to buy an app, I’ll say – that costs $2 and you only have $3 to spend, is this what you want to spend your money on? It starts the thought process of deciding what is worth spending money on at a young age.
3. Teaching About Physical Money
Toddlers are learning their numbers, and in general, just love absorbing information. And have you ever noticed that somehow kids understand money is important without any context it seems? So teaching kids what the different coins mean, the different bills, and even just practicing their numbers and counting with dollars and coins can be a great way to familiarize your kids with money.
4. Finding Ways to Play with Money
Another great way to teach is through play. Playing store and giving the kids 5 play coins or dollars (like this set here on Amazon) and assigning prices to items in your play store. They can learn about what kinds of items they can get without going over their budget. It is a fun way to introduce this. My kids absolutely love putting their play money in this play cash register, and pushing the buttons even if they aren’t 100% sure what they are doing!
You can also get them a toy purse or wallet. My 3-year-old has a toy purse she absolutely loves putting things into and taking out.
5. Reading to Kids About Money
Most of us are reading to our kids. My kids love books. So we added a few books about money into the rotation. These are a way for kids to be both entertained and educated. Here are a few options for books that you might enjoy reading to your kids!
- The Berenstain Bears’ Trouble with Money
- Little Critter: Just Saving My Money
- Grandpa’s Fortune Fables
6. Inviting your Toddler to Participate in Shopping
We all need to shop. A great way to teach your kids about money is by inviting them to participate in the shopping experience. For example, if you clip coupons, you could have them join you. Even if you do it on an app, they could look over your shoulder while you do it. Bringing them to the store and teaching them about price tags. Again, the purpose is just practicing basic principles, not to bog them down or stress them out with the details. Keep it light and high level. Even if it’s just asking them to read the numbers on a few price tags, helping them be aware that those price tags exist can help set the foundation for future talks.
Why It Is Important for Kids to Learn About Money Early
Setting the foundations early to openly discuss money and finances can set your child up for future success. In a lot of household’s money is not something that is openly discussed, and this can be for many valid reasons. However, the more you can openly discuss your finances with kids or general finances with kids, it can help them advance their understanding of how these items work.
As a young adult, I lived beyond my means, and some of that still stays with me today. As someone trained in accounting and finance, I understand the basic concepts. However, habits are hard to change once they are established. It is very important to do your best to set your kids up for success. Helping your toddlers understand the basic concepts early on can assist in the bigger conversations as the children get older.
