How young is too young to start talking with your kids about money? That’s a question I’ve been thinking about lately now that my 3-year-old has started to show more interest in the contents of my wallet.
As it turns out, experts say it’s not too early to be talking about money with your preschooler.
A piggy bank as a conversation starter
The other day, my son surprised me by asking me for a piggy bank, which he had learned about from his favorite book, “Don’t Forget The Oatmeal!” In the book, the Sesame Street character Ernie pays for his groceries with coins that he pours out from a brightly colored pig.
I’d always thought I would buy my son a piggy bank eventually. I especially like the Money Savvy Pig that has separate slots for saving, donating, spending and investing. But I figured I’d wait until he was older and ready to talk about money more explicitly.
Why I’ve been waiting to talk about money
Researchers say kindergarten-aged kids may somewhat understand short-term savings goals, but they tend to have a hard time letting go of cash and waiting a significant amount of time to spend it. Some experts, as I wrote in about in my “The right age for a piggy bank” post, recommend that parents wait until kids are closer to 8 or 9 before trying to teach their kids about saving.
But what about other money lessons? I wondered. Am I doing my child a disservice by postponing money conversations? I’ve been working hard lately to set a good example and model good financial habits – such as limiting what I add to my grocery cart and saying no when my son impulsively asks to buy a toy.
But so far, I’ve avoided explicit conversations about money. I don’t even explain what I’m doing when I pull out a credit card or say where we are when we visit a bank. It may be time to start, though, now that my son is showing more interest.
How to start talking finances with your child
Kids as young as 3 are indeed ready to start learning about money, say experts in financial literacy (April is Financial Literacy Month, by the way).
Here are five ways to get the money conversation started:
1. A piggy bank as a tool
The Consumer Financial Protection Bureau, for example, says preschoolers are more than ready to start practicing financial skills – such as delayed gratification – that will serve them well in the future. The CFPB also suggests exposing very young kids to money issues by engaging in pretend play and practicing basic financial activities, such as sorting coins into piggy banks.
2. Coins, cash and shopping lists
Financial literacy expert Pamela Yellen, in an interview with CreditCards.com contributor Lisa Bertagnoli, suggests teaching young kids about coins, such as what’s different about pennies, dimes and nickels. She also recommends creating a shopping list with your child and using cash to pay for items on the list.
3. Banks, ATMs and ride-along learning
When you visit a bank or ATM, talk with your child about what you are doing, experts say. Explain why you need cash or why – and how – you’re making a deposit through the ATM. The teller may even make the trip more memorable by giving your child a lollipop or stickers when you visit.
4. Curl up together with a good book
Reading to your child books that discuss financial concepts is another way to instill good money habits, experts say. My son’s favorite book, “Don’t Forget The Oatmeal!” is a great example. At one point in the book, Ernie impulsively grabs too many goodies from the shelf and Bert has to tell Ernie to put back everything that’s not on their shopping list.
5. Old cards and calculators as props
Expired credit and debit cards, calculators, your checkbook and even old bills can serve as money-related props with your child, researchers suggested in a 2015 paper published in Childhood Education. Another tip from the researchers: Use prompts, such as, “Don’t forget to check how much money you have before you go shopping.”
The most important thing, experts say, is to keep things fun and try to intersperse low-key, developmentally appropriate lessons at various points throughout the week.
“Preschoolers can learn financial concepts and money management skills if they are incorporated into their daily social interactions with adults and other children,” the researchers in the Childhood Education study wrote.
As for me, I’ve agreed to buy my son a piggy bank. I won’t overwhelm him with complex savings lessons just yet, but I’ll use this as an opportunity to start talking to him about money more than I have before.
See related: Money and credit games to play with your kids, Financial literacy resources for parents and children, How to ask the kids to help out in a financial crisis