5 Money Lessons for Young Children (And a Few Books They Can Read)

Young girl walking on sidewalk with bookbag on.

One common, major complaint in the American education system is the lack of teaching about finances.

However, the goods news is that with today’s world chock-full of resources, parents can do the job themselves. Almost from the beginning, you can teach your children how to handle money wisely.

Young girl walking on sidewalk with book bag on.Many resources seem to identify age 3 as a good time to start, but it seems clear that it’s never too early to start teaching your children about money. Kids retain a shocking amount of information, and obviously that information reflects what they see. So if you want to teach money, you have to show them money.

Here’s how you can do it.

How to Teach Money to Children

Believe it or not, you can teach almost anything to children. The issue is not whether you can teach them, but what you will teach them in the finite amount of time you have with them.

For example, if you chose to seriously teach your children about helping the homeless, you would buy books about the subject, point out appropriate lessons in everyday life, and consistently remind them that the world is full of people less privileged. In other words, you would devote time and resources to teaching them about philanthropy, at the expense of any number of other important subjects.

We don’t have an infinite amount of time to teach our children about everything important in life, although we can cover most things at least in passing. For the big stuff, we have to make a concerted effort to discern what is most important and to reinforce lessons with repetition and age-appropriate resources.

Money, since it will be centrally important to our children’s lives throughout adulthood, is a subject worthy of parents’ consideration, even when the children are very young.

Here are a few lessons you can teach.

1) Most Things Have a Cost

By this, I don’t mean intangible things like love and respect and such. While there is often an emotional cost expended when we receive those things, that’s a more complex concept than very young children are ready to deal with.

Instead, start simple—and physical. As your toddler runs through the grocery store, trying to open everything in sight, verbally reinforce the fact that you must buy those items in order to use them. They belong to the store, and they will not belong to you unless you pay the store with money.

Later, play games in which you are a shopkeeper and your child is a shopper. Give him or her a handful of coins, grab some items, and play out a transaction. You can even haggle a little bit!

2) Teach the Names of Coins and Bills

You can have your child outline coins on a piece of paper as an activity. Then have them write the name of the coin in the center.

It will be hard for young children to grasp the value of coins and bills at first, but they can learn their names. Eventually, you’ll be able to assign values to those names, and you won’t have to worry about teaching the child what to call the coin or bill since they already know.

3) “You May Have to Wait to Buy Something You Want”

This idea comes from Forbes. It’s not a fun lesson, but it’s a true one. There may be many things your children would like to buy, but it’s important to reinforce the discipline of delayed gratification early.

To put a positive spin on this, you can couple it with introducing a piggy bank. This way, your children can monitor their money as it grows and be a part of the process of building enough cash to purchase what they have their hearts set on.

Dave Ramsey’s recommendation is to use a clear jar or piggy bank rather than an opaque one. This way, they will visually see their money growing as coins rise in the jar.

Get excited along with your kids. Today, they added a dime from yesterday’s amount. How cool is that!

4) Involve Them in Purchases

One great recommendation from Parents.com is to have your kids help you clip or print coupons. When you get to the store, ask them to keep an eye out for the item on the coupon.

This is both a game and a surefire way to engage them in the buying experience. If the child is old enough, you can have a conversation about how the coupon helps you save more money than you would have without it. Either way, your child will be paying attention to the entire process of buying an item: from locating it, to bringing it to a cashier, to offering money for it, to owning it.

5) Open a Bank Account for Them

If your child owns any amount of money above what a piggy bank will hold, it’s a good idea to open a savings account that will hold their money. This is especially true if you have decided to give them an allowance.

While keeping money in a bank account is less tangible, it is reflective of today’s digital world. As your child grows older, you can regularly log in with them to their online account and review the value in that account. It’s also an opportunity for you to teach them about interest, since the bank will pay your child pay for keeping their money.

A Few Children’s Books on Finance

A great story with captivating visuals will do a lot more to engage and teach children important lessons than simple words will. With that, here are a few resources with great children’s book lists. Since there are so many, we won’t list them here. Instead, we’ll point you to the lists themselves (note that many of the books on the lists overlap):

  • The Best Children’s Books – Here’s a great list of books that teach children money, compiled by teachers themselves.
  • Self-Sufficient Kids – This list of 28 books is broken down by age and topic.
  • US News – 5 of the author’s favorite books on money to read to his kids.

By: Ryan Drawdy
October 13, 2017

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official opinion or suggestions of CenterState Bank.