What Do A Child’s Earliest Interactions With Money Mean?

I have a fifteen month old son, and in the past I’ve discussed in great detail some plans for providing a strong financial education for a child. In almost every case, I’ve basically started looking at solutions for when he is older, usually at least four years old.

However, in the last few weeks, my son has actually taken at least a sideways interest in money. He has a piggy bank on his dresser that I’ve occasionally been putting pocket change in with the intent of eventually moving it to his 529 college savings plan. About two weeks ago, he watched me put some change in the bank, after which he pointed at the bank and asked “That?” (which is his fifteen month old way of asking what exactly something is).

I put the bank on the floor between us and gave him some pennies to put into the bank. It challenged his motor skills quite a bit to get the coins in the slot, but he managed to get all of them in. Since then, when he notices the bank, he wants to repeat the activity.

Even though this just seems like a simple child’s game, I’m a strong believer that the games you play earliest in your life have a strong influence on how you turn out. For example, my earliest favorite game was rolling around on top of the family dog and I still dearly love dogs.

Thus, I’ve started to transform the idea of putting coins in the bank into a reward. When he helps us pick up his blocks in the living room, I fish a few pennies out of my pocket. He gets excited and races into his bedroom, where I get down the bank and he puts the coins inside. He’s seeing putting money away as a good thing at this early age.

Of course, he has no concept of what money is at this point, so I’m already devising plans to work on that. At the local grocery store in our small town, transactions are all done by cash, so when I take him in there, I make sure to use change to pay for at least one item. He sees the change and wants the change, so then I hand it to the checkout girl, who hands me the item I’ve bought, which I then hand to my son to hold (I usually do this with an item that he likes, such as yogurt). At fifteen months, I’m already trying to show my son what money is and how it works.

Does he understand what’s going on? Probably not, but I think he is aware that there is something going on with the money. The full connection may or may not be fleshed out in his mind between the game of putting money in the bank and the trip to the grocery store, but if I keep it up and keep showing him again and again how it works, he’ll understand that you use money to buy things you need and you also save money to buy things you’ll need later. It’s a lifelong lesson that I never really understood until I was an adult; I don’t want him to have to go through the same painful processes that I went through.

Do you have any other suggestions on how I could get these fundamental concepts across to my son? Please share them in the comments.

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  1. Michael Langford says:

    I’ve read about a man in Japan who gave his daughter control of the clothes budget for the family.

    I’ve read another about a man who gave control of the dining out/movie budget to the little boy.

    In both cases, the kids made the predictable errors at first, then figured out some smart strategies after that.

    –Michael

  2. Clever Dude says:

    Do you think your son is learning to save or learning how to put coins in a slot…potentially for vending machines later in life???

    I’m definitely a proponent of teaching kids smart saving and spending early (which I wasn’t taught), so I support you fully.

  3. Grant Boston says:

    The hard part is to teach your kids that money does not just “appear” and is an exchange of value. At this stage all he sees are coins going into his piggy bank, in the future he will need to “pay” some token amount from his money to get things he wants. This will probably be in 3-4 years when he is learning number concepts.

    When my kids started demanding pocket money I never had enough cash on hand so I set them up with their own accounts and EFTPOS cards and then direct credited money into their accounts for them to manage. This taught them how to read statements and my daughter caught the bank charging fees! She got a valuable lesson about how banks work for themselves and the costs of money

  4. Mia says:

    I have a lot of suggestions (we have 3 kids, 9,7,2) and the best one, I think, is to make sure to teach the value of patience (which itself requires self-leadership, a major component in successfully managing money). Many wonderful things in life take time, commitment, and effort and result in huge rewards (your marriage, a garden, homemade soup) and discussing those things with your son will help him learn the value of saving. Also, learn to trust your parenting and your son – he really will follow your example and hear what you say; letting him have the freedom to make painful financial mistakes, without you micro-managing over his shoulder, will give both of you many learning opportunities. So I guess that’s two fundamental concepts – patience & trust, on a day to day basis.

  5. D - Money says:

    Great post. I’d like to add a suggestion. Educate your son about personal finance as much as you can, but do not discuss your own personal / family financial situation in front of him.

  6. Mitch says:

    D-Money,

    Speaking as a former child rather than as a PF educator, he’ll have to know something about it when he reaches the likely point of filling out the FAFSA/Profile/whatever, and if his parents do not do things the same way as his peers do it will be much, much less bewildering if it’s discussed with him (budget limitations, so we prioritize buying X and investing in Y, so that’s why we don’t do Z).

    So I’m curious to know what your take on this is and why. (For example, are there are some trade-offs to disclosing or not? That could be an interesting topic to discuss.)

  7. Maybe you can teach him the value of money the way that humans teach monkeys. It would require a little research for an exact plan, but perhaps you can take the concept and run with it.

  8. Woody says:

    I still remember one of the first games my aunt played with me when I was a child, and it’s where a lot of my understanding of money comes from. It was called “PayDay” (from Parker Bros I think), and walked you through a month, complete with the concepts of bills, salaries, savings accounts, loans, and all that.

    I don’t know if a kid can learn something as complex as finances before they’re 2 or 3, but I remember at about 4ish that was my favorite game. Each time I invest in something, or take a loan, I think back to that game and the blessings that an early understanding of money has brought me.

  9. Christine says:

    There is a site: The Money Savvy Generation (www.msgen.com) that has some tools to assist in teaching children about finances. I’ve gotten some of those tools. Please check out for yourselves.

  10. Jasmine says:

    We got given $1 a week when we were little, to use however we liked. After a few years it went to $2, and eventually to $5. (It was a nice system because we had housework that we did for this money, but when my father had a temper tantrum because something when wrong in the household, such as the scissors going missing and us getting the blame, he would take money off us again – so it was arbitrary, a lot of the time – it did not make us feel very safe. Especially because he has inconsistent with the behaviours that he disliked.)

    Anyway, I saved my $1 coins for a whole month, and when I had $30, which was more money than I had ever held, I asked my mother to take me to the toy shop and I bought a little electronic handheld game that other kids at school had. No sooner had I got out to the car and pulled open the plastic box (which was no doubt cleverly made to be broken so that it could not be returned) and I held the joy in my little hands, did I realise how badly I had been ripped off. This game was stupid. It only did a few things; I was bored with it before I got home, and I had spent a whole month saving for it. I cried. My mother said little, as she knew this would happen. I definitely learnt from that experience.

    I also learnt all about depreciation AND bartering the next day at school in the lunch break. A money-savvy friend, on learning about my disappointment, said she’d buy the toy from me. Yes! I thought – I won’t lose out after all. But – she said – she’d only pay $15 for it now, since it was used.

    “But it’s only been used for one day!” I protested.

    “Then barter with me,” she said. “Ask me for $20.”

    “All right,” I said, “Bring $20 and you can have it.”

    “Oh no,” she said. “$15 or you’re stuck with that boring toy for ever… and you don’t want that, do you!”

    “Hey!” I said. “You told me to barter with you.”

    “Yeah,” she said, “But it doesn’t mean I have to asgree with your asking price.”

    I shrugged, feeling well behind in the matters of finance. I ended up keeping the toy. Even my little brother wouldn’t take it, as a gift, saying it was “a stupid little game for girls”.

    Later, during my teen years, I became very devout and wanted to tithe to the local church. I diligently saved up every dollar I received and put away 10c into a piggy bank for the church. In
    hindsight I would not do this anymore – perhaps I’d give the money to a charity, but probably not the local church whose historic building funds are probably higher than their actual local charity funds. (No offence churchgoers but I know how often old churches need restoration works.) Anyway, putting this 10c per dollar away helped me learn how to save. I never touched that box, even when I really really wanted an item…

    I realised that I would spend every other dollar I kept on presents for my friends instead. Giving treats, cards and gifts to my friends felt good. However, I needed to budget – because my parents expected me to pay for my outings etc with the pocket money, too. So I divided the money after tithe in half – half for me, half for gifts. This system worked well and I kept it until I was 16 years old. Then I moved out of home and continued my budgeting and saving and spending on a larger scale, served well by my early penny-counting days!

    Today I run a small business and I’m going to teach my first child to do the accounting. I knew a family whose 11-year-old daughter did the double-entry bookkeeping, including the tax. They were homeschooling and she learnt most of her number skills this way. I also know of a family whose 5-year-old always pays for the juice and cake when they go to a cafe – the mother gives the child some cash before they leave home, and when they get to the cafe, the child learns to hand over the appropriate-sized note and then they count the change together after. What valuable lessons.

    Another family requires that each child gets an after-school job, even if only one day a week, so that they can save towards their first car. They are told that if they can save half the cost, the parents will pay the other half. All the kids work at after-school jobs quite happilly and still manage to do all the other things that kids like to do.

    I want to do some things like this eventually. When I was a child I was terrified to handle money until I was about 12 years old – I wouldn’t even hand over money for a lollipop or an ice cream. I think I got that fear from the way my father handled money, as though it was always trying to hurt you.

    It definitely matters what you teach the child by example when they are small.

    Thanks for your article, it got me to remembering my childhood money stories.

  11. Steve in W MA says:

    Intellectual understanding is important but highly overrated. Habit and feeling/emotion are huge and in many ways much more powerful in terms of determining our behavior.

    I believe your son’s deep and positive emotional memory of playing this game/activity/action with his piggy bank as a young boy will form an emotional and behavioral frame on which later, more sophisticated understandings of money and what it’s about will be overlaid. And he will be financially secure because of it in his adulthood and probably even his teens, probably far beyond his peers (if that means anything).

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