Recently, I wrote about how to teach your preschooler about money. It included a lot of basic things like recognizing coins have different values. Once they get to elementary school, they can start to tackle bigger money issues.
Before I get into the money part, I need to address one elephant in the room. There doesn’t seem to be a good name for children ages 6-10. They aren’t preschoolers and they aren’t tweens. I found a couple of places calling them grade-schoolers, so I’ll go with it.
One of the great things about this age is that you can do so many things that you couldn’t for a preschooler. Let’s look at some of the things:
Savings and Spending
By grade school, kids often have an allowance. That means they can make more of their spending decisions than a preschooler. My kids started to want more complicated things. Sadly, the days of decorating a big cardboard box like a rocketship and flying to the moon isn’t enough. They wanted to save up for a Nintendo Switch and the latest Pokemon games. Now I spend most of my time trying to pry them off of video games. That’s a topic for a different blog or article.
Unfortunately, with the example of the Nintendo Switch and Pokemon games, we couldn’t shop around and try to stretch a dollar. We got one a few months before COVID hit and considered ourselves lucky that we got one at all.
Earning Money
Grade schoolers can do extra chores around the house to make some extra money. My kids help out with the dog boarding business that I run at home. It’s only fair that I give them some money. Unfortunately, it’s uncommon that kids can reasonably help in your professional life.
There are other things that kids at the upper end of this age range can do. They may be able to babysit a younger sibling for a short time. They may be able to bake some pastries for a bake sale.
A lemonade stand may sound antiquated but it can work. Our area has limited the places where lemonade stands can be. I guess they didn’t want kids pestering the tourists. We run a virtual lemonade stand using a version of a lemonade stand game I played as a kid. This is a great way for kids to about supply and demand.
Other Financial Education
This age group is a great time to teach kids money with televsion. Some episodes of Teen Titans Go make learning about real estate investing fun. Other shows like Warren Buffett’s Secret Millionaire Club are greatly focused on personal finance.
Additionally, you can start to share the family finances with your kids. You don’t need to share everything, but you can share some of the necessary expenses that the family has.
Some people think you shouldn’t teach preschoolers about money. I can understand that perspective. They are busy learning numbers, letters, shapes, colors, music, and, well, just about everything. (The great thing about a young mind is that it is super spongy.) There’s a place for learning about money on that list.
“Children ages 3 to 5 are usually too young to understand abstract financial concepts. Still, they are building a foundation that can serve them well in the future.”
Specifically, the CFPB suggests that preschoolers can learn about earning, saving, planning, and spending.
Preschoolers and Earning Money
You can begin a conversation about earning money by explaining the various jobs that people do. At this age, kids know a lot of community helpers such as firefighters, police, doctors, and carpenters. Kids at this age can learn about running a store as a start to entrepreneurship.
My favorite thing to do with my kids was to take them to the grocery store and the dollar store. At the grocery store, we could go over the prices of various food. Then, at the dollar store, they would get a dollar to pick out anything they wanted. It’s a great combination because they can see what a dollar buys. Unfortunately, some dollar stores now charge $1.25. It makes the numbers a little more difficult, but they’ll still get the concept.
Preschoolers and Saving/Planning Money
At some point, your preschooler will want something that costs more than a dollar. It may come from an advertisement on television or a trip down a toy aisle. This is a good time to hone in on an item that a kid wants. If your child gets an allowance, he/she can learn to save for that special item.
Another great way to teach saving is to use the ticket system at an arcade. Usually, you can spend 5 or 10 tickets for a very cheap plastic ring with a spider on it. For 25 tickets you may get a super ball. For 100 tickets you could get some super sugary Fun Dip. Finally, for 10,000 tickets you may be able to get a remote control car. I usually tried to get my kids to find something at the 25 to 50 ticket level that they liked and save the rest for something great. They have enough tickets now to get something that would normally cost about $20.
Preschoolers and Spending Money
At this age it’s too early to teach kids family finances. However, you can explain how simple spending works. My kids gained an idea of how to spend from the arcade ticket example and the dollar store scenarios above.
My kids also have made some mistakes with money. One time my older child paid my younger one five dollars to go upstairs and get him a toy. It wasn’t a good use of five dollars – he was just being lazy. The tooth fairy had recently come and he felt rich. I thought it was interesting and I learned a lot from that exchange. I hadn’t been doing a very good job of teaching them the value of money. At this age, it’s okay for kids to make mistakes – that’s how they’ll learn.
Other Things to Teach Preschoolers about Money
Beyond the main concepts of earning, saving, and spending there are a few other things you may want to teach your preschooler.
The Value of Free
At a very early age, my oldest asked if we could go to the bookstore and buy a Pokemon book. His grandmother always takes our kids to the bookstore and buys them books. I said, “I think I have a better idea.” He said, “Are you going to buy it on Amazon?” I didn’t realize that he knew what Amazon was. “No”, I said, “I’ve got a better idea.”
We got in the car and I drove to the library. I explained that all the books here are free. The only catch was that we have to bring them back when we are done with them. He picked out a couple of Pokemon books and worked through them the best he could. They weren’t written for five-year-olds. He had the most success with the Pokemon dictionary/manual which had short descriptions of nearly a thousand Pokemon.
When we went to playgrounds or dog parks, I’d occasionally mention that they were free. While one could argue that we pay for these things with our tax dollars, it’s best for kids at this age to think of it as free.
One of the great things about preschoolers is that free stuff goes a long way. You can make a great boat out of a large cardboard box from Amazon. We’ve made Blaze and Monster Machine toys out of cardboard that we had lying around the house. Take advantage of all the free stuff you can at this age, because there will be a time when they’ll want the coolest clothes or gadgets to fit in with their friends.
Introduction to Coins
Preschool is the perfect time for kids to learn about coins. I know there’s a big backlash against screentime for kids, but I’m a firm believer in educational screentime in moderation. I grew up on Sesame Street, Mr. Rogers, and Electric Company and I turned out okay (for the most part).
Here’s a great example of a 3-minute song that teaches kids about the four basic coins (penny, nickel, dime, quarter) that we use in the United States:
It’s a catchy song, right? You could probably sing this to your kids yourself and avoid the screentime, but I think it’s more effective to have the visual of the penny with the entertainment of the song.
Another way to introduce kids to coins is to use the best book to teach kids about money. It starts with introductions to coins and what you can buy with them. It’s a bit of an older book, so you could buy penny candy back then. The book does get more complicated, so you may lose your preschooler’s attention before the end.
Final Thoughts on Teaching Preschoolers About Money
There are many ways to teach young children about how money works. The important thing is that you make an effort to explain how it works. It’s not any different than how you’d explain any number of non-money topics to kids. It helps to keep it as simple as possible at first. You can always build to the more complex topics.
Don’t hesitate to use this time to build a strong foundation of very basic money skills.
American Girl is a strange brand to put out a guide to money. Some of their dolls cost hundreds of dollars. That’s before you get into the extra clothes and accessories. My wife sold five of her niece’s American Girl dolls for around $500. They were used, without the boxes, and in some cases not even in the original clothes. Back when the nieces were in their American Girl phase my wife saw the prices on the accessories in a catalog and quipped, “I hope you get an American job that pays American money for this stuff.”
I have to admit that when we found out that we having were boys, a part of me was relieved to not have to get drawn into that consumerism. Instead of American Girl stuff, my kids got drawn into Pokemon consumerism. I don’t know if that’s any better.
When my wife saw the book, American Girl: A Smart Girl’s Guide to Money by Nancy Holyoke, we joked that it must be one page long with only four words, “Don’t buy our products!” However, it was used and only a couple of dollars. Curiosity got the best of me, so I bought it. The copy I have is the original version from 2006 and that link is to the revised version that’s in print today. It has a different illustrator, but the same author. Using Amazon’s “Look Inside” feature, it seems like the content itself is the same and the illustrations are just as good – it’s just a different style.
So, with two boys and no daughters, I’m going to attempt to review a personal finance book for teenage girls by a company that sells outlandishly priced products. None of this makes any sense, but this is where we are.
To start, the book isn’t one page and four words long. It’s 95 pages, with colorful illustrations on every page. It’s the perfect presentation for a teenage audience. I can’t emphasize that enough, because getting kids to choose to read about personal finance is not easy. A teenager will plow through this book quickly. I’m tempted to ask my 9-year-old son to read it, but I know it would have be a big bribe – teenage girl books are weird for 9-year-old boys. I’ll give it a try anyway – chocolate usually works. Also, it would give me a chance to put a few dollars in his how to teach kids about money. Finally, there is a page about the power of compound interest.
The book closes out with a few pages on donating to charity. It also included one page about how $20 can mean different things to different people and even different things to you based on how you acquired it and what the expectations were. This particularly resonated with me. I can spend hours writing an article for this site. A dollar earned here means much more than a dollar earned in salary.
American Girl: A Smart Girl’s Guide to Money isn’t a complete guide. For its intended audience, it is close to perfect. It teaches just enough without getting too long and complicated that teenage girls would simply not read it.
When I was growing up, I didn’t know anything about the family finances. It was simply my job to do well in school and my best everywhere else. My father died when I was 13 and my mother invested the insurance money. I started to learn a little more about the family finances, but I still didn’t know much. Even today, I couldn’t tell you when my parents paid off the mortgage on the house.
I didn’t need to know the family finances, but I feel like I would have been more prepared if I had that information. I might not have taken for granted all the things that seemingly magically happened. In college, I might have understood the value of a dollar a little better.
I think it’s a good idea for kids to know some basics about the family money. They certainly don’t need to know the details.
I was trying to think of a way to show the kids roughly how we spend our money. My kids are 8 and 9 and they have a fairly good handle on place value. However, whenever possible, I feel like younger kids work better with smaller numbers.
That’s when I came up with an idea. What if I took our rough finances and deleted three zeros? Yes, I’m dividing everything by one thousand.
Here’s an example of what a conversation of what our family’s numbers might look like:
“Mom and I make about $200 a year. We actually make more than this and things cost more than this, but this is an example of where we spend money.
We spend about $40 in taxes. Taxes pay for libraries, roads, police, firefighters, and schools – many things that we share as a community. Many adults don’t like paying taxes, but everyone I know enjoys having these things.
We spend $40 to buy and maintain this house. We’ve been paying money to buy this house for ten years now. We have five years left. Then we won’t have to may so much.
We spend $25 to send both of you to the best school around. It’s so good it costs most people $50 to send two kids and they happily pay it. We get a discount because mom is in the military. Everyone has the choice to pay $0 for the public school – it is paid for by the taxes above. Those public schools are good here too. Some of your good friends go to public schools and they are great kids. It’s always important to try your best to do well at school, but it feels more important to us because we pay so much money.
We spend another $13 on cars and trains. Much of that was for when mom was in the office. Remember she’d spend the night in Boston so that she didn’t have to drive so much. Those hotels add up, but it gives her hours more of free time. With COVID, she’s been at home a lot more, so we don’t have to pay this much. We also own our cars just like we plan to own our house in five years. Most people make payments every month to buy their cars. There’s a lot more to car costs than the cars themselves. We have to pay for gas and to maintain them in case they break down. We also have to pay for insurance in case we, or someone else, get in an accident. Insurance is something we can talk about later.
We spend $14 on food. Half of that is food that we eat at home. The other half is food that we eat at restaurants. We don’t eat out at restaurants very often, but it costs a lot more. We get you those cooking classes so that maybe someday you can make restaurant-quality food from your kitchen at home. That would save a lot of money.
We spend another $5 on utilities. These are things like heat, electricity, water, internet, and phones. I’ve done a few things to save money on these things. The solar panels saved a lot of money. The new heater in the basement works a lot better than the ones they made 25 years ago.
We spend another $5 on other random stuff that we buy. Things like shampoo, toothpaste, shirts, pants, and shoes.
When you add up all these costs of things we get to $137. That leaves us with $63 left.
We spend money on a lot of other fun things. We have that zoo membership. We are going to do those bumper boats on ice. I don’t add up how much these things cost. They aren’t free, but they are fun. We spend another $10 on vacations. We spend another $5 on summer camps and another $3 on activities like karate and snow sports.
That’s $155 of the $200 spent, so we have about $45 left. We still have some other expenses here and there and the rest we save.
We’re making this simple for you and some of these numbers are estimates, but it gives you an idea of where our money goes and the decisions we make when spending it.
I haven’t had this conversation with them yet. Maybe they won’t care. Maybe they’ll find some of the stuff interesting. In any case, I feel it’s good to be prepared to cover that conversation if it comes up.
The only downside to this that I can see is if my kids think they can give me $3 and pay for a year of karate and snow sports. I don’t think it will too bad though. They have had some school exercises where one icon is equal to a hundred units, so five icons are equal to five hundred units. This is a similar exercise except that one dollar is equal to one thousand dollars.
I have two boys, one in the second grade and one in the first grade. My second grader is doing basic math with money at school, things like making change correctly. It’s certainly a good start, it is math disguised as adding and subtracting tens and twenty-fives. My kids learn more about personal finance when I take them shopping and show them how I compare unit pricing on a jar of spaghetti sauce. For the most part, I should be focusing on how to give your child an allowance.
Alas, two of my greatest interests in life are personal finance and my kids… I would inevitably try to combine the two. I can’t teach all personal finance through television. So when I heard that MoneyTime was an online class for teaching kids personal finance, I did a little research and reached out to them to find out more. Every week, I get a dozen or more companies asking me to pitch their product or service. This was one of the few times that I’ve reached out to the company. (You may have noticed that I review very few services.)
MoneyTime Review: The Overview
MoneyTime is designed for kids between the ages of 10 to 14. From their FAQ:
“We’ve found after testing that children below 10 years old found the math to be a little too complex and those above 14 found the graphics of the game to be too childish. That’s why this age range is perfect for MoneyTime.”
My 8-year-old is in challenge math classes at school, so I figure it was worth a shot. All year, he’s been getting extra instruction in school about how to work with computers just in case they have to go to home-schooling. That proved very helpful in getting him going with the basics of navigating the application. They were right about the math though. Early on, there were some multiplication questions. Armed with his Multiplication Machine, he was ready to go. I was always nearby, but he only called on me a couple of times. If I wasn’t a personal finance blogger (and a Tiger Dad) curious to push the age limits, I would wait until age 10 for the kid to get the most out of the classes.
The MoneyTime system is broken up into 8 major topics:
Topic 1: Earning, saving and interest
Topic 2: Employment
Topic 3: Managing your money
Topic 4: Borrowing money
Topic 5: Property
Topic 6: Investing
Topic 7: Business
Topic 8: Protecting your money
Each of those topics is broken up into 4-6 modules or lessons. For example, “Managing your money” has modules of Smart Spending, Budgeting, Banking, and Paying. I’m not sure that a 10-year-old needs to consider employment in topic 2, especially the “resume” module. However, I think it’s based on the outline of “earn, save, invest” in that order.
My son completed the first topic, so this review will be based only on that section. The lower right-hand part of the dashboard gives you a little view on how that went:
If you read from the bottom up, you can see my son got only 67% of the pre-test questions on earning, saving, and investing correct. I was very impressed by this pre-test because had little exposure to some of the topics. I had to remind him a couple of times that he wasn’t expected to know the answers. I used this opportunity to teach him how to eliminate some answers that seemed obviously wrong and then take his best guess of what’s left.
After a module of instruction, there is a 10 question quiz. He got 60%, 90%, and 80% respectively on the earn, save, invest sections. The invest section introduced the difference of compound interest vs. simple interest – a distinction he still talks about today. When it came to the final review test on the topic of saving, earning, investing, he scored a 93%. I expected some improvement because he was learning the material on the test, but this was outstanding.
MoneyTime Keeps Kids Motivated
You may have noticed that my son has an avatar of a weird orange bird superhero. He likes fire-type Pokemon and my theory is that this most closely resembled Blaziken – the fire chicken.
You can spend your earnings (which come from completing modules) on improving your avatar. This was an important motivation for my 8-year-old. He also made investments in education (the stack of books) and investments (the treasure chest). The education helps him earn more as he completes more modules, he’ll earn more. This seems to be a little like the game of life where having a good career helps you earn more from the “Pay Day” spots on the board. His current job as a “trainer” earns $1000 a year. His $5,500 savings is enough to upgrade to Carpenter that would give him a 50% raise per year ($1500).
It’s not clear to me how years pass in this world, but I think it’s because we stopped where we did. My son did one topic (the three modules) over two days during school break. He hasn’t gone back to it since then. I don’t think it is because MoneyTime didn’t have the staying power. Instead, my kids simply don’t have a lot of time with school/homework/karate/cub scouts/etc. I want them to have some unstructured time as well. We should revisit it over the summer. He’ll have more free time and be almost 9 then.
MoneyTime Review: The Conclusion
I gave you our experience with MoneyTime, but I think the company’s professionally-made, less than 90-second, video shows off a little more from a different perspective. It’s worth the quick watch:
There are a couple of online courses for kids and personal finance, but this is the first one I’ve tried. It works very well. Then again, kids’ personal finance education is non-existent, so the bar is very, very low. When I think of what we spend on karate/skiing classes and specialty camps, the value of this education is way, way, off the charts.
This link will give you 25% off bringing your annual membership to $49. That price is current as of this writing (1/26/2022). They have a deal going on now. The pricing used to be $99 a year. If you think it’s something that you might be interested in, I would buy it now. In the interest of full disclosure, I should mention that the company will give me a commission on sales.
