Three Lessons to Help Teach Toddlers About Money

I have a three-year old toddler and it has been important for me and my husband to find ways to teach her about money and the value of $1.  I firmly believe and have personally learned that there is not a one-size-fits-all approach to parenting.  In our household, the following rules work for our daughter but you may need to adapt these lessons to fit your child’s personality and interests.  The earlier we, as parents, begin teaching our children about how money is used and works, the more our children will use it in their lives.

For our little toddler, my husband and I have incorporated a few rules in our household to help teach her some valuable lessons about money.  Some of the lessons include:

LESSON #1:  Earning Money and Reaping Rewards

Our daughter loves gumballs so we decided to buy her a gumball machine that you have to put a coin into to retrieve a gumball.  To obtain a coin, she must do a specific task.  It is important to not associate too many tasks to obtain the reward because the attention span of a toddler is very limited.  Keep the task(s) simple.  When our daughter performs her task she is very quick to let us know that she has done so to obtain her coin.  She is so proud to take the coin she earned to the gumball machine and retrieve her gumball.

LESSON #2:  Saving Money for Specific Goals

Since birth, we have been saving coins, grandparent allowances and monetary gifts in our daughter’s piggy bank.  When the piggy bank gets full, we sent down with her to sort the money (quarters go in one stack, pennies in another, dimes in another, etc.).  After sorting the money, we then count the coins with our daughter so she can understand how much money she has saved.  From the savings, she then can determine if she has enough money to purchase a particular toy that she is interested in for the month. This teaches our daughter to save for specific purchases, how to sort coins, identify types of coins and how to count money.

LESSON #3:  Giving to Others Who Are in Need

When our daughter has enough savings from lesson #2 to buy a toy of her choice, she must select a toy in her playroom to give away to charity.  The reason is to teach our daughter that giving can be just as rewarding as receiving.  This rule was not the easiest to implement.  Let’s face it, a three year old doesn’t really like to share… let alone give away something that belongs to them.  We have been using this rule for over six months now and our daughter is the first to go to her room to pick out a toy to give away now when she has purchased a new toy.  Her exact words when she hands me the toy she has selected to give away is “Here Mommy, this is for a little girl or boy who doesn’t have one”.  This melts my heart when she says this because at three she is already understanding that giving to others is extremely important.

As she gets older, we plan to expand on these lessons.  For example, to expand lesson #2, we plan to take her to the bank to open a savings account with half of her savings and she will only be able to use half her savings to purchase specific toys.  This will teach her the importance of saving for emergencies or bigger monetary goals.  To expand on lesson #3, we want to have her take the toy to a charity of her choice and see where the toy she gives away is given to others.  We hope that by expanding this lesson more that she will want to spend more time finding ways to do for others.