Money lessons for 2-5 year olds

If you want your kids to have healthy money habits when they are grown up, you should already teach them some money lessons when they are toddlers.

  1. You need money to buy things. It’s good to let your child see you work with cash to pay for things. Tell them that the bank card that you pay with at the till is also money that can run out. You can talk to them about things that cost money (toys, food, outings, bicycle, clothes) and things that is valuable even though it is free (friendship, love, time together).
  2. You have to work to get money. Talk to them about your job, what you do and why you do it. They can already understand that you can only buy them stuff because you get money when you work. This will help them to understand the value of money and that they can’t get everything that they want.
  3. Sometimes you have to save up before you can buy something. Even if it is difficult to wait, some things are more expensive and if we want to buy them we have to save up. You can help them start a piggy bank or mark a jar with a picture of what they are saving for. Different jars can go towards different things. This makes it concrete and easy to understand. Read about these budgeting apps for kids
  4. Some things are more important to buy because you need it and other things are nice to have and that is why you want it. Teach your child this difference and show them how you prioritise between needs and wants.
  5. You can use up all your money. Practically show them this with the money in your purse or in their piggy banks. Especially if you pay with bank cards, children tend to think there is infinite money.
  6. You should think about your decision before you buy something. You can teach them this by showing them that you think things through. Verbalise that you want something, but you wonder if you really need it, where it would be best to look for it, if it is a good price or not, that you should look at another store to compare prices etc.

Once a child understands these concepts you can open a bank account for them and start teaching them how the money that they save in the bank can become more when it earns interest. Click here to read about money lessons for older kids.