MintFamily with Beth Kobliner: How Young is Too Young to Teach Kids About Money?

Moms have been asking me this age-old question for years.

The short answer: Start when your child is old enough to say, “Gimme!”

The long answer: Research shows that kids as young as three years old can learn about money. If it’s hard to imagine your finger painting, peanut-butter eating little one calculating compound interest, fear not. Karen Holden, a professor at the University of Wisconsin-Madison, found that kids don’t need math skills to build good financial habits. They just need to understand basic, but critical, concepts like waiting, making choices and developing values.

In fact, this idea was a starting point for Sesame Street’s “For Me, for You, for Later,” a financial education initiative entirely for preschool-age kids and for which Karen and I were advisors. I even got to star in the videos with Elmo!

Moms aren’t the only ones who ask me how early to start teaching kids about money. Recently, I was tasked to answer this question by a very important dad: President Obama. As a member of the President’s Advisory Council on Financial Capability, I’m developing an initiative for families called “Money Milestones,” a set of 20 simple, age-appropriate key concepts for kids aged three to 23-plus.

Based on our draft, which is still in progress, here are the four milestones your 3 to 5-year-old should reach:

You need money to buy things.

To help your child achieve this milestone, try these activities:

– Identify coins and their value.
– Discuss how you may value something that is free, such as playing with a friend.
– Identify items that cost money, such as ice cream, gas for the car, or clothes.

You earn money by working.

To help your child achieve this milestone, try these activities:

-Describe your job to your child.
-Walk through your neighborhood or town and point out people working, like the bus driver or the police officer.
-Explain that some people start their own businesses, like clothing stores or restaurants, and those people are called entrepreneurs.
-Encourage your child to think about how he could earn money by setting up a lemonade or cookie stand.

You may have to wait before you can buy something you want.

To help your child achieve this milestone, try these activities:

-When your child is standing in line for a turn on the swings, or looking forward to her favorite holiday, point out that sometimes we have to wait for things we want.
-Find three jars (or cans) and label one for saving, one for spending and one for sharing.
-Suggest that your child put some of the money she gets into the saving jar, so she can buy a toy or treat when she has saved enough.

There’s a difference between things you want and things you need.

To help your child achieve this milestone, try these activities:-

– When you are out shopping, point out essentials, like food and clothing, and ask your child to describe items that he may want but are optional.
– Talk about how your family decides what to buy and what to pass up. Which is more important: Buying cookies or fresh fruit? Soda or milk?
– Draw a circle and divide it into sections for food, rent or house payments, clothing and “optional items” to show that there is a finite amount of money to spend.

Have you tried any of these activities with your kids? If you give it a try, report back!

Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller “Get a Financial Life: Personal Finance in Your Twenties and Thirties,” and a member of the President’s Advisory Council on Financial Capability. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.