3 Ways to Teach Preschoolers About Money

Learning healthy financial habits starts when we’re young. Preschoolers’ brains are like little sponges, soaking up everything in their world. It's the perfect time to start introducing information and behaviors around money to your little one. And, it doesn’t have to be boring. There are a ton of ways to kickstart their financial savvy, and we explain three easy approaches below.

1. Books

Kids love books. Books tell stories, and storytelling is a fantastic way to expose your child to learning of any kind. Children’s books break down complex concepts and ideas, like money and finances, into digestible lessons that kids can understand and relate to. There are thousands of options for books that contain lessons about money. Some classics include:

• “A Chair for My Mother” by Vera B. Williams
• “The Four Money Bears” by Mac Gardner
• “The Berenstain Bears Dollars and Sense” by Stan & Jan Berenstain
• “One Cent, Two Cent, Old Cent, New Cent” by Bonnie Worth
• “Paddy’s Payday” by Alexandra Day

Visit your local bookstore today to peruse the many options available, and have your little one help pick out a few books to get started!

2. Games/Hands-On Activities

Any parent or educator will tell you how important play is for children. Hands-on activities help occupy their busy brains and can be a way to learn new things.

You can start simply by showing them real money. Get some coins out of your wallet and talk to them about what each one is called and how much it's worth. Let them hold the coins, stack and count them, and carry them around.

Now, give those coins they just learned about a cool home and make a piggy bank together. This could be as easy as taking an old coffee can or another container and decorating it. You could also paint or decorate a traditional pig-shaped bank. Once the piggy bank has been created, encourage and remind them to put their coins in it.

Nurture their understanding of how money is earned by “going to work.” Get them to dress up and set up pretend work areas like an office, classroom, or restaurant. Play with them as they pretend to run the show at their business. At the end of the day give them a paycheck for their work. This is a fun activity that you can repeat from time to time to reinforce the idea.

For an activity to learn about spending, set up a pretend grocery store in your house. Set prices for various items and let your child use actual money to buy their groceries. This will help them learn that different items cost different amounts and that there’s a finite amount of money to work with.

In fact, shopping in general presents a perfect opportunity to talk to your child about money! Use the time spent in a store to explain that each item has a value and that in order to take it home, it must be paid for using money. You can even engage them in the process by letting them choose the bills and coins needed to pay, as well as hand the money to the cashier when checking out.

It’s a chance to use their burgeoning math skills, too! Help them to add up the total costs of the items you’re shopping for. You could give them a budget for the trip also, say, $5. Allow them to “shop” with that $5, helping them to navigate when something is too expensive or, to save what they have left over after choosing an item.

3. Making Choices

A huge part of maintaining healthy financial habits as an adult involves making choices: wants vs. needs, saving, donating to charity, and more. You can empower your child to make financial decisions from a very young age.

Start by introducing them to the difference between “wants” and “needs.” Create a stack of cards with assorted items on them, some necessities, some not. Ask your child to identify which cards belong in which category. If they make mistakes, talk with them about the card and the item on it and why it belongs in the other category. This will help them make choices when they’re out and about in the real world.

It’s likely that your child has already started receiving money as a gift for things like their birthday or holidays. Sit with them and discuss what they want to do with the money: spend, save, or share. Help them set aside the amount they want for each of those areas, encouraging them to spread the money across all three. Then, let them use the money in their “spend” bucket to buy something for themselves. The money they chose for sharing gets put in that piggy bank you made together. Finally, the “share” can take a couple of different routes: it could be donated to a cause your child cares about, or it could be spent on something to give to someone else. Let them choose. The spend, save, share method will teach them the importance of saving as well as developing healthy spending habits.

PSECU’s Brighter Future Banking

Once you’ve laid the foundation for healthy financial habits with your child, take the next step and open an account for them. We have lots of options for youth and their parents including custodial and regular savings accounts. And, PSECU grows with your child, offering convenient digital banking options for college students and beyond into adulthood.