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How to Start Teaching Toddlers About Money

Teaching toddlers about money concept.

You want your children to understand money, its value, and how to use it properly. Many parents think this will have to wait until your kids are in school, but the fact is that you can start teaching toddlers about money pretty early.

There are various things you can do with younger children that will help them understand what money is and why they need to value it.

1. Games

Very young children will tend to think the nickel is the more valuable coin because it's larger. Using the coin identification game will help them learn the names of the coin. You can do this by tracing coins on paper and then having the kids color them in, then get them to match the coin to the image. (Always use close supervision so your toddler doesn't swallow coins).

Playing store helps introduce kids to the concept of exchange and trade. Use play money and exchange it for goods. You can use anything as the goods, not just designed toys, but any suitable item that's too large for them to swallow.

2. Books

There are books out there that are specifically written to introduce concepts around money to younger kids. You can read these books to them. Make sure to choose books that are fun; the last thing you want is to read a boring book to your toddler. They will tune it out, demand another book, and not retain the information.

If you don't find the book enjoyable, neither will they.

How to Start Teaching Toddlers About Money

You want your children to understand money, its value, and how to use it properly. Here's how to teach toddlers about money.

3. Discuss Money in Front of Toddlers

If you and your partner tend to get heated about money, this might be a bad idea. But having the kids present for family discussions about budget will help them pick up how important it is by osmosis.

If you are budgeting for something exciting like a vacation, then you can also start to introduce budgeting, planning, and choice. They might not understand it right away, but over time they'll pick it up. It doesn't matter if they're too young to participate in the discussion. The important thing is that toddlers learn that it's okay to talk about money openly and don't develop stigma or stress regarding it.

Some parents let their kids sit on their lap while they pay bills, check on investments, etc.

4. Teach Them Money Has Limits

This can be hard. Toddlers love the word "no" as long as they are the ones saying it. But if you go to the toy store with a budget, then stick to the budget. Introduce the concept that you have to have the money you spend and that if you buy item 1, you may not also be able to get item 2. They can have the giant teddy bear or the rocking horse.

Sometimes this can be a little bit of a painful experience, but the earlier they grasp it, the better a chance they have of growing up into older children and adults who know how to handle a budget.

5. Let Them Participate in Buying

When buying treats for your toddler, let them hand the money to the cashier. It's easier if you use cash. Like playing store, this helps them understand the transactional nature of money.

If you use cash they will also start to see that larger amounts of cash are needed for larger items. While the specter of a cashless society is constantly on the horizon, we aren't there yet. Both credit and debit cards are too abstract for younger kids to really get their minds around. Also, it will help them improve their counting skills and start developing arithmetic.


A parent out of the shot teaching her toddler about money by giving her a piggy bank.

6. Give Them Their First Piggy Bank

Toddlers aren't too young to get their first piggy bank, but there's a caveat. For very young children, choose a clear piggy bank. First of all, these piggy banks are plastic and thus aren't going to break when they inevitably drop them.

Second of all, they can actually see how much money is in the bank and when it's close to getting full. Drop a coin in the bank when they offer to help with something or do something else you want them to feel rewarded for. Then they know that when the piggy bank is full they get something, introducing the concept of saving.

Let them pick it out themselves; pigs are traditional, but you can also get bears, cats, unicorns and other creatures.

7. Teach Toddlers to Give

Encourage your kids to give some of their money away, or have them help you choose a charity to give to. The habit of giving, started early, will last a lifetime.

Giving to charity also makes people happy, but don't overdo it; you don't want them to learn to resent the money which "disappears." Consider encouraging them to give to things which have a tangible result, such as adopting a zoo or sanctuary animal, or buying toys for other children. Or have them give to the local dog shelter...and go there to see the puppies. (This can be dangerous, though...) Always let them choose the charity themselves, though, although you want to curate the list.

8. Set a Good Example

And last is the most important thing. Your child will pick up on your money skills. It's absolutely vital to set them a good example. If you constantly spend beyond your means, fail to save, and never give, then they will learn those things too.

The first thing you need to do to teach your toddler about money is to work on your own money skills and make sure that you have the good foundation you want to instill in them. If you give to charity (and enjoy it), if you set money aside for savings in front of them, they will pick up on these good habits and develop them as they get older.

It's Never Too Early to Teach Your Toddlers About Money
Very young children are capable of understanding the concept of money and how it works. They learn best through games, books, and simple earning and saving habits that you can instill. They understand better if you use physical cash. By teaching them these concepts at a very young age you can set them up for a lifetime of good money management!

Author Bio

Keith Huckabay

Take 3 parts Internet Junkie, 4 parts Broadway Fanatic, 1 part News Addict, 2 parts Comedy Enthusiast, and mix it with some ice in a blender and you get Keith. He is highly energetic and brings just a little bit of quirky to all he does. When he’s not marketing his pants off for PrimeWay, Keith likes to hold court with his friends over a nice dinner or traveling new places.

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