“Momma, look what we did in school today,” exclaimed my 5-year-old as he pulled out a worksheet dedicated to the life cycle of a butterfly.
As he explained how a caterpillar formed a chrysalis and then metamorphosed into a butterfly, I had to admit I was impressed.
Behind him, on the kitchen counter, sat a handful of change. Something compelled me to see if he knew the names of the coins.
Holding out a nickel, I asked what it was. He replied, “Money.”
Rephrasing my question, I asked what the name of the coin was. He guessed a penny.
While he was learning a wide range of topics in school, money was not one of them. This was a wake-up call to my husband and me to teach him financial literacy at home.
If he can understand the concepts of a chrysalis and metamorphosis, he can learn about money. Since then, we’ve implemented strategies to help him learn about finances in ways that make sense for our family.
We use real money when shopping
My son likes to play store by setting up a cash register and “selling” items from his room. He used to play with pretend coins, but now we use real money, which allows him to practice counting money, giving change, and understanding how coins and dollars interact.
Going into stores used to be like running through a gauntlet of temptation. Like many children, he’d see something he wanted and immediately ask for it. Thinking I was helping him learn the concept of cost, I would have him read me the price of the item he wanted. He obliged and then asked me to buy it. What was missing was the correlation between the numbers listed and what that meant in the actual currency of money.
Courtesy of the author
Having him bring his money to the store allows him to understand the value of a previously abstract number. When he does make a purchase, he is responsible for completing the transaction rather than us adding it to our tab and paying us back. We want him to have the experience of physically handing over the money rather than just swiping a card.
He still makes poor choices sometimes
As all parents know, using logical reasoning with young children doesn’t always yield the results you hope for. After a trying experience at a store where I explained why buying a particular plastic toy wasn’t a good idea, I decided to let him learn for himself with his money.
Unsurprisingly, the toy broke within a day. After initially feeling upset, he stated what a waste it was. Now, he is much more deliberate with his purchases if he’s spending his money. We’re working on him having the same intentionality with ours.
We explained how compound interest works
My son receives money from family members for each birthday and Christmas. Until last year, we put it directly into his investment account. As he gets older, we want him to understand what happens to his money when it is invested.
Using dollar bills and coins, we showed how money makes more money without him having to do any work. He asked how much money would be in his account if he put $10 in it every birthday until he was “old” like me. When I answered hundreds of dollars, his eyes widened in disbelief. He has been aboard the investing train ever since.
If children can start reading in kindergarten, let’s trust they can also learn about financial literacy. It will pay dividends.