Parents are their children’s primary teachers and role models, and this extends to important lessons about money. By age five, children think they know a lot about money. However, as adults we understand that money and financial management are quite complex and that information and experience are needed to learn how to make wise spending and saving decisions.

Most preschoolers watch television daily and see thousands of commercials in a year’s time, all encouraging people to buy certain products. They also see adults making purchases with cash, checks and credit cards. This can lead to confusion and the belief that money is always available at the ATM machine or by writing a check or being in possession of a little plastic card. It is important for parents to teach their children values and knowledge of financial management.

Children learn about money in many different ways. Here are tips from Thrive by 5 to help parents teach their children about money:

• Look for the “teachable moment,” a time when your child is ready for new ideas or asks a question. For example, when you are using an ATM for cash explain that you have put money into the bank or credit union earlier, so you are actually getting your own money out. Keep your explanation simple and appropriate for the child’s age. Know when the “teachable moment” is over. Share more information the next time.
• Build on past learning. Children learn at different rates and through repetition. Encourage your child to ask questions and help make decisions when possible. When selecting an item for purchase, let the child help reflect on what was selected in the past and select an item that has meaning now.
• Read together. Books and stories can help explain the adult world and complex ideas. Visit the library often and look for books that show children making decisions and using money.
• Play together and make learning about money fun. Play pretend grocery shopping and use play money to “buy” favorite items.
• Plan with your child. Involve your child in family decisions when possible. For example, let your child help plan the family vacation and the special things you will do. Remember to talk about purchasing tickets and other special items for the trip.
• Watch TV together. Talk about the shows, ads, and what they are selling. Explain that families must choose what to buy and cannot have everything shown on TV.
• Stick to your rules. Before shopping, set shopping rules so your child knows what to expect and how to behave. Be consistent in enforcing the rules in a calm manner.
• Set a good example. Let your child see you using sound money management principles, such as making and using a shopping list, and comparison shopping.
• Consider an allowance. This is a good way for children to learn to make their own money decisions and live with them. As children get older and more responsible, increase the allowance and discuss goal setting and spending decisions. This information, along with practice, can help children prepare for future independent living.