Teaching Kids About Money – Under 3 years old

We will be focusing on money and children at different ages over the next month. Here is our first article based on helping children under 3 years old to understand the concepts of money.


The world is beginning to embrace the idea of a cashless economy, and it has raised some interesting questions about how we impart financial knowledge to our children.


There are troubling statistics on the financial literacy of adults. A high percentage do not have a clear understanding of the impact of inflation, interest charges on unsecured debt, the importance of saving for retirement, the need for long term investments. The other problem is time and money. Namely, the longer you take to pay off credit the more interest you pay. Equally the longer you take to save the more money you make.


Children need to be taught the basics and there are very few schools that offer financial literacy as a subject. The onus therefore falls to parents to impart this knowledge. Concepts like living within your means, pay yourself first, save 15% of what you earn. These are timeless values to teach your children, but only once you understand why yourself and put these goals into action.


Children need to be prepared for their lives as adults, particularly when it comes to money management.

Teaching Children about Money

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Here are ways to teach your children to be frugal and money savvy:


Children Under 3

Very small children don’t yet understand what money is or how it works. One of your jobs as a parent is to teach them about money and its value.


Making play money is a great craft project to do with your toddler and will give you this opportunity. Use play money to pay them for little chores like picking up their toys etc. Let them use play money to buy food from you. Kids love to play store. Together, you can make price tags for food and toys and “sell” them to each other.


Involve small children in your monthly budget planning. Get them a big calculator and let them play with the money you made together and the calculator. This way they get to see you sit down regularly and work on budgeting and goals. This will imprint the idea of working with money when they are a little older and can grasp this idea.


To transition to a cashless concept, pretend to pay the play money into a little saving account for them at an ATM or local bank. Then take the card and let them buy a treat or a toy when you go grocery shopping.


Teach your child that in order to buy a treat or toy they must first earn the play money. This way you are not only teaching them about the concepts of work and being paid, but also instilling in them a sense of discipline.


Teaching them needs vs wants

Needs are things that we can’t survive without (water, food, shelter, clothes). Wants are everything else.


With small children 95% of the things they ask for are wants and not needs. This doesn’t mean they should never get the things that they ask for but it is a good time to start introducing the concepts of needs vs wants to them.


They don’t need to understand the difference between the two at this early age, however if you consistently differentiate between the two in conversation, this will eventually sink in when they get older.



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How to do it:


When you go shopping look at something you really want. Let’s say you go into a grocery store and see a cake. Comment on how yummy it looks, but then tell your child that we must get food first. Food is more important. If there is money left over after that then you can get the treat. Make sure that at least 50% of the time you say that we can’t get the treat today and explain why. This can sometimes blow up in your face as they might throw a bit of a tantrum. Don’t give in when this occurs. Teach your child that they cannot always get what you want.


Encourage and reward your child for correctly identifying wants and needs.


Make a game out of it. Mark grocery items like tooth paste, toilet paper and essential food items as "needs" with a pink marker. Then mark sweets, cereal, cooldrink etc. as "wants" with a different colour marker. Start by differentiating between the two in conversation. A great time to do this is when your child helps you unpack groceries. Eventually when you can see that they are starting to understand the difference between the two you can reward them with coins or with treats.



Send Your Questions to Negociate Credit Solutions at email contactme@negociate.co.za or get additional contact information below for facebook messenger or submit a "Call back Request"


There is no quick fix to getting out of debt. Make sure that you partner with a Debt Counsellor that is going to assist you to get out of Debt.


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About our Author

Lauren is a registered member of the National Credit Regulator. Prior to that, she worked as a Financial and Technical consultant for McGregor-BFA (Now INET-BFA). McGregor-BFA provided Trading and Market related data as well as Investment management software to Asset Managers, University Business Schools and Investment entities. Thereafter experience was advanced to the Property Market working as a Project Manager for Propertyi. But it was her career at the IEB in Adult Education that inspired a passion of hers to educate consumers about responsible ways of managing their financial lives and the long term advantages of doing so. It is her belief that financial education should be taught from an early age. By doing so we can create a country that is economically stable, driven not only by work ethics, but by becoming Financially Independent too.

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