3 Concepts Even a Pre-K Money Mammal Can Understand: Simple, Practical Banking Activities Parents Can Do with Their Kids

Happy Financial Literacy Month!

This is a great time to focus on a few core financial literacy concepts. These main ideas should be at least introduced to our kids before they reach kindergarten. I’ve blogged about teaching preschool kids before, but this is a top-of-mind topic because I spoke this week at the NHSA (National Head Start Association). I thought it would be useful to include some simple, practical activities that you can do with your child to introduce or further these concepts.

“We know kids are already emergent consumers because marketers target toddlers.”

As a terrific paper by the NFI points out, it’s helpful to think of financial literacy like, well, literacy. Because we know that kids are emergent readers and writers from a young age, we read to them from the time they are born. It’s useful to think of financial literacy in the same way. We know kids are already emergent consumers because marketers target toddlers, so it makes sense to provide the foundation for making smart money choices. This will help raise money-smart consumers (and savers!).

Here are three core concepts they can and should be exposed to in preschool along with simple activities you could do as early as tomorrow.

“This is the mother of all financial literacy concepts.”

1. Needs vs. Wants – This is the mother of all financial literacy concepts. Kids must learn the difference between needs and wants because they are being taught consumption, both actively and passively, from the age of two or three (even if you shield them from television). Activity: The next time you go to the store, play “needs vs. wants.”  When you pass by the Lucky Charms, ask your child, “Need or want?” And then move away as fast as possible to avoid the temptation yourself. Seriously, though, this simple game can make shopping a little more fun and help engage them. You can explain that breakfast is a need, but sugared cereal is really a want. Of course, if you’re game, have your child ask you to identify “need or want” in the next aisle. Opening up this conversation will likely be very enlightening for both of you.

“Have your child set a goal tomorrow.”

2. Delayed Gratification – Walter Mischel’s marshmallow study awakened people to the importance of delayed gratification. And Mischel has since found and promoted the idea that the strategies kids learned to delay gratification can actually be taught. I think you could hear the collective “Phew!” from parents worldwide. Activity: Have your child set a goal tomorrow. Paste a picture of the goal, the amount it will cost and how long it will take them to save, and start saving! If you haven’t yet set up an allowance, give them the weekly amount necessary to achieve the goal so they can see the money accumulate in the jar. Keep it simple: Make it a goal they can achieve in 2-3 weeks. Just that little bit of delayed gratification and goal achievement will be a valuable lesson. Then start an allowance.

3. Making Choices – Just as life is about the choices you make, so go money smarts. Getting kids used to the concept that choices always come with money is essential. If you haven’t started an allowance with your young one yet, give them a small amount of money the next time you’re in a store, and give them the opportunity to make a buying choice. Sure, it sounds easy, but when presented with a store full of choices, a decision can be harder to make than it looks.

Remember, you’re setting the stage for growth here. Start teaching your kids money smarts today.