by Stacy Francis, CFP®, CDFA
In the park this weekend, one of the moms shocked me by telling me that her 5-year-old son recently asked her about car financing. Why, he wanted to know, can’t we have a Ferrari? It won’t cost anything – we’ll even get cash back!
Advertisers are well aware that small children pick up on basic money concepts. Yet many parents wait until their children reach adolescence – if not forever – to teach them proper money management. To ensure that you and not the advertisers will shape your children’s relationship to money, below are a few money lessons you can teach them while they are still in preschool.
- Money can be saved or spent – but not both. The best way to teach your children saving is to start setting money aside for a certain toy that they really want. Your children will learn the value of saving when they hold that precious toy in their hands.
- Once money is spent, it is gone. Many children seem to believe that money grows in their parents’ pockets – and just as many parents support this belief by acting as though it does. You can get your message across by giving them a dollar, allowing them to spend it in the store, and then not giving them another one next time they want to buy something.
- People have to make money choices. Most adults don’t do this well, so it would hardly be fair to expect great choices from preschoolers. But if you give your children an allowance, and when it is spent make them wait until next week before you give them any more, eventually the message will start to sink in that when they choose to buy something, they automatically un-choose to buy something else.