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Dollars and Sense: Money Management for Children

By: Dr. Rebecca M. Solomon

It’s never too soon to start talking to your children about money. In fact, the National Center of Financial Education advocates starting a child’s money education at around the same time he or she is learning to count. The holiday season is a perfect time to help children begin to understand the role that money plays in purchasing gifts and other items. By age three, children begin to understand that their parents use money to buy things, that money is earned by working, and that they can save money and wait to purchase things later.

From a very young age, children are practicing skills and attitudes that will serve them well in school and in the future. Children as young as three years old can grasp financial concepts such as spending and saving, according to Beth Kobliner, a member of the President’s Advisory Council on Financial Capability and author of Get a Financial Life. They regularly engage in planning and problem solving, staying focused, and waiting for what they want. Through their pretend play and their everyday activities, children can develop thoughts, attitudes, and behaviors that will form the foundation for their later financial well-being.

At The Learning Experience, children have a variety of opportunities to develop the essential foundations for solid financial sense. Essential mathematics skills like counting and sorting are part of everyday activities. In addition, students have a variety of opportunities to engage in pretend play each day, including in our Make Believe Boulevard®. Make Believe Boulevard is a specially-designed classroom that serves as a learning center and space for socio-dramatic play. The Make Believe Boulevard consists of play and learning store fronts that comprise the community of The Boulevard.

During their daily visits to Make Believe Boulevard, children have countless opportunities to engage in role-playing as an extension of monthly-themed topics of interest, seasonal activities, and learning goals. In terms of developing financial awareness, students learn about working at a variety of jobs, getting paid, and paying workers. They also have opportunities to engage in purchasing decisions, and choosing which goods and services in The Boulevard meet their needs or wants. 

Learning to wait is essential to good savings habits. The Learning Experience’s Manners Matter program includes lessons and activities that help children practice waiting their turn, a skill that makes it easier for student to wait for things they need and want when they get older. Our students also learn about how their money, time, and efforts can be used to help others. Our strong philanthropy curriculum teaches concepts such as charity, donating, and giving. Students have frequent opportunities to participate in philanthropic events, and they experience early on the joy of giving to others.

At home, children learn about money by observing their parents’ money management habits. Keep in mind that you are teaching about money whenever you shop for a bargain or splurge on something special. Children learn about setting goals when they see you saving money for a big purchase

As a parent, there are a number of things that you can do to set your children on a path to financial well-being in adulthood

·         Explain to your children how you earn money. They should understand where money comes from, and why work is important.

·         When shopping with your child, point out the differences between essential items the family needs, such as food and clothing, and items they might want but are not essential. Think out loud about why you are selecting one item over another. Discuss how your family decides what to buy and what to pass up.

·         Find an empty jar or can, and label it for saving. Suggest that your child put some of the money he or she gets into the saving jar, so he or she can buy a toy or treat when enough money has been saved. Some parents set up three jars, labeled spend, save, and share to help their children manage money. Children can spend some money on smaller toys or candy, save money for a larger purchase, and donate money to a cause that aligns with your family’s values.

It is also a great time of year to help your children see that there are wonderful ways to enjoy the season that don’t cost a thing. Tour neighborhood holiday light displays, volunteer with a worthy organization, snuggle on the sofa with hot chocolate and a television movie, and visit with family and loved ones. This will help children see that, while it is important to handle money in a smart and responsible manner, spending time with one another is more valuable than any amount of money.

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