Start the Money Conversation with Young Children

September 1, 2016, 9:58 am | Sandra McKinnon, Laura Sternweis

AMES, Iowa -- Adult money habits start to form as early as preschool, according to research by University of Cambridge. Media, parents and child care providers play an important role in forming money habits in children. So give those preschoolers some pennies and start talking about money! That’s the advice of Sandra McKinnon, a human sciences specialist in family finance with Iowa State University Extension and Outreach.

Girl Stacking Coins“We know that adults, whether parents, grandparents or child care providers, have a great influence on young children," McKinnon said. "Just as they learn to cross the street or tie their shoes, children learn important money lessons by watching the adults in their life earn, spend, save, share and borrow."

Many of these habits apply not only to financial well-being, but also to other areas of life.

“Money management skills are life skills. Children need to learn to stop and think before they act, to wait for things they want and to follow directions,” McKinnon said.

“Research shows that children are able to reach key milestones at different ages. That isn’t surprising. We learn to sit up, then crawl, then walk. When it comes to learning money skills, there are steps to take, too,” she said.

Children from pre-K to second grade already are forming attitudes around saving and buying. They can count and sort coins, and they understand that people trade money for items they want or need. Parents can start the money conversation by having more interactions with their children.

“Make a shopping list together. When you’re at the store, have your children count the items, mark items off the list and put items in the cart. Children also can help compare prices and products and help you stick to that shopping list,” McKinnon said.

In addition, model positive attitudes. Children are good observers; they’ll notice whether adults roll their eyes and sigh when paying bills or show pride and a sense of accomplishment.

Reading with children is another way to teach them about money.

“Children’s books about money can be fun to read, and reading together offers time to weave in your own experiences and lessons you want them to learn,” McKinnon said.

Many young children spend time in child care. ISU Extension and Outreach human sciences specialists provide training for child care providers, such as “Munchkins and Moolah: Teaching Preschoolers to Share Save, and Spend” and “I Want! Building Good Consumers,” which focuses on the influence of media and advertising, McKinnon noted. Child care providers may sign up for training via Iowa’s Child Care Provider Training Registry.

The Allowance Game” is available for free download from the Extension Store. Parents can use the game to help their children learn to make decisions about spending allowance money wisely.

For more ideas, visit the Consumer Financial Protection Bureau. Select educational resources and resources for parents to find free activities and conversation starters for children ages 3 to 5, as well as information for older children. has information for youth, teachers, other educators and researchers. The site also offers games, fun facts and activity ideas.

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