Your preschooler must have seen you buying supplies in exchange of money, so your child has a basic interpretation about how money works. Though, this might not seem like the age to teach them about money but you saw that they already know all about it.
Here are the best methods to teach your preschooler about money.
1. Talk age-appropriate things about money for now.
Your child must have seen you withdrawing cash from the ATMs or buying groceries using the credit card almost every day. These tiny time slots are perfect for helping your child understand money. Here, for example, you could have said, “Did you know, our money is kept safe in the bank and whenever we need it we can take the money from this machine to buy whatever we want?”
2. Demonstrate that goods and services have a cost.
Whenever you and your kid goes to the market for running errands, you can always discuss about the thing you are going to buy and how much it costs. When you pay for it, make sure your kid sees you counting the money and handing your money to the cashier. In case of a debit card, you can say, “The card takes the money from my bank account and gives it to the store.”
3. Play with imaginary money.
This is the best risk-free method to teach your child about money and explaining the concept of paying for goods and services. Your child’s limited mathematical knowledge won’t allow him to do complex addition and subtraction, but they can play games like “store” or “restaurant” that are simpler. For example, you can ask how much the teddy bear costs, and hand over the asked amount of imaginary currency.
4. Give them little amount of money for some work.
Many parents might say that the preschool is not the right age to give regular allowance; still you can teach them about earning and saving money. Make them in-charge of a coin jar. Tell him, in exchange of helping mom with household work he will get a coin which he can put in the jar. This will establish in his brain the relationship between work and money. Additionally, a sense of ownership and responsibility will be instilled.
As per a study by T. Rowe Price –asset management firm, children whose parents let them decide how to manage their money are less likely to spend all the money as soon as they get it.
5. Be a model demonstrating showing and spending
Your preschooler may be too young for understanding the complexity of financial planning, yet they can be influenced by your attitude and behaviour about money. Do you compare prices when shopping? Do you use your credit card for buying everything from your credit card, or wait if you can pay with cash? Be aware of the things your child is observing, and the message he receives from you about financial habits.
Money is a complex thing to understand and even adults fail at understanding its magic, you can yet teach your preschooler about the basics of finances about it.