Tips for Teaching Preschoolers About Money

Tips for Teaching Preschoolers About Money

Children have an inherent curiosity about money. But the truth is, many parents are more likely to talk to their kids about drugs, sex, or peer pressure throughout their lifetime than they are about the value of a dollar — and they’re missing an opportunity to help create financially responsible habits that can last a lifetime.  

Research shows that by age 3, children have the ability to understand basic concepts of value and exchange that are the foundation of finance. Beginning this journey in preschool can provide a foundation for smart financial decisions down the road. 

Start by teaching your child the difference between wants and needs and the correct language to express both. Explain to them that a need is something a person requires to survive while a need is something that they strongly desire. Beth Kobliner, author of “Make Your Kid a Money Genius (Even if You’re Not)” suggests walking your preschooler up and down the grocery store aisles asking them if things are wants or needs. If it’s a need, put it in the cart. If it’s a want, leave it on the shelf.

Your child’s ability to understand self-control and delayed gratification begins to take shape by the age of 7, so it’s really important to start laying the groundwork while they are young. Sometimes, as parents, we try to avoid situations altogether that may result in meltdowns over kids wanting things they can’t have. 

But don’t let the opportunity to say “No” go unnoticed by always taking the path of least resistance. In other words, don’t avoid going to a store that has candy just because your child is convinced they need a bag of M&Ms to survive!

Researchers at Duke University followed children aged birth to 32 and found that those who were not encouraged to practice self-control as children had more credit problems as adults.

Here are 6 more tips that will help you get the conversation started on finances with your preschooler. 

1. Get your kid a piggy bank

Letting your preschooler tangibly feel coins and bills could spark even more interest in the topic of finances. And they love to add to it!

2. Don’t just use debit/credit cards

Aside from the fact that it may save you in finance charges and other fees, making a concerted effort to use cash to pay for goods or services in front of your children will help them learn the concept of exchange.

3. Be honest and straight forward

We’ve all been there: You’re at the store and your kid wants something so bad they won’t stop asking until you finally tell them you don’t have the money for it just to get them to give it up. Financial experts say you should actually take a more honest route by telling your child it’s not in the budget or reminding them that it’s a want and not a need. 

4. Play store with real or fake money

Toddlers and preschoolers learn best through play — so bring it to their level. Let them explore and feel some loose change and help them count it out to “pay” for what they want. 

5. Let them pay

When you bring your kids to the store or a cafe and do decide to let them pick out a treat, explain to them how much it costs and the amount of money you’ll give them to purchase it. This might also open up a teachable moment about delayed gratification and saving.

6. Give them chores

Aside from giving them some responsibility and getting some help around the house, giving preschoolers simple chores will help them to internalize the non-material payoffs of hard work.

Start a college fund. Even if you don’t have a lot of money to put in it, just starting one is the first step. Studies have shown children whose parents started college accounts for them were more likely to actually go for their higher education degree. Start talking to them about their account and when they are old enough to understand it, involve them in the process of saving. 


Once you’ve ticked off all the things on this list — it doesn’t mean your job is done! Teaching kids about money should be a continual conversation that grows with your child’s ability to understand finance. Once you’ve started, you’ll find there are teachable moments in even the most monotonous of the day’s events! 

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