FDIC Consumer News
For Pre-K to Grade 2: Earning and Saving Right From the Start
Children in this age group are naturally curious about the world around them, including money. By introducing several basic concepts — and being a good role model — you can help them gain financial skills that can last a lifetime.
Learn about how money is made and used: Children can be introduced to money as soon as they learn to count. Even if you usually pay by credit or debit card, once in a while use bills and coins so your child can learn about the different values. Imaginary games, such as pretending to be at a store or restaurant, can help teach money concepts, too. Role playing with real coins can be especially advantageous because it can teach children the values of different coins, but remember that coins are a choking hazard for younger kids. The U.S. Mint has resources for parents to use.
Learn about how money is earned: Getting paid for little chores will allow your child to learn the value of working and earning. Consider making a chart for jobs your child can perform and include the payment amount for each completed task.
Start to save: Consider separating spending money from savings. Begin with clearly labeled jars or piggy banks for your child to divide up his or her cash. This will show your child that spending and saving should go hand in hand.
Understand the difference between needs and wants: For your child to make good spending decisions, he or she will need to be able to identify and distinguish needs (things you cannot live without, like food and shelter) from wants (toys and candy). One game you can play involves singling out items in your house and asking your child if it’s a need or a want…and why. You can try the same thing while shopping.
Borrow responsibly: Children at this age generally don’t understand the difference between buying and borrowing — they have to be taught how to be responsible for borrowed items and to return them on time. Help your child create and maintain a list of items he or she has borrowed from friends or relatives, along with the date due. Doing so will support the concepts of responsible borrowing and personal accountability.