Kids and Money: What to Expect and When
by Evonne Lack
When will your child understand that money is earned – not waiting in infinite supply at the ATM? And when, oh when, will she realize that she doesn’t “need” that glittery tiara in the same sense that she needs a warm jacket? We tapped the fiscal and educational experts to give you some idea about what to expect year to year as your child learns about the world of dollars and cents.
Give a 2-year-old a quarter, and she’s as likely to drop it down the air vent as to put it in a piggy bank. She doesn’t yet understand that the shiny circles in Mommy’s purse are worth more than a jelly bean or a big acorn. “Money is a concrete representation of an abstract idea, and 2-year-olds don’t have the representational thought to understand that,” explains preschool director Megan Hans.
However, your little one can understand the most concrete definition of money – that “money” means dollars and coins – and she can learn that it’s something we use at the store. She may enjoy hearing you say the names of the coins and repeating these words herself. And she probably loves sliding play dollars into a toy cash register or pennies into a piggy bank.
Just never let her handle coins unsupervised – they’re one of the biggest choking hazards around. That means keeping your purse out of reach, too, until she’s old enough to be trusted not to pop spare change into her mouth.
Some 3-year-olds can begin identifying coins by type – if they’ve had enough exposure, says Jerlean Daniel, deputy executive director of the National Association for the Education of Young Children.
And as representational thought develops and a child witnesses more cash transactions, she begins to grasp that money has some value. Give your 3-year-old a quarter, and she may understand that she can “buy” a treat – but she may still be bewildered when the cashier doesn’t give the quarter back.
Many 4-year-olds can understand the “trade aspect” of money, so they know they won’t get a coin back after handing it to a cashier. But give your 4-year-old that quarter, and you may hear her planning to buy a jungle gym with it. Most 4-year-olds can’t comprehend the magnitude of price differences. “But they’re starting to grasp that a quarter is worth something different than a nickel,” says Laura Busque, outreach manager for the Ohio Credit Union League and a former teacher.
Many 4-year-olds can appreciate that money comes from a job and that pay is limited. They can also understand that some people have less money than others and that those with more can help those with less.
At 5, your child will probably begin developing a slightly more realistic idea of money –many parents even start a small allowance around this age.
So if you explain that $10 will buy a set of art supplies, while a quarter will only buy a piece of candy, your child will be more likely to accept this. But it doesn’t mean she’ll want to save up for those art supplies; she’ll probably opt for the candy. Kindergartners are still very invested in the present moment.
Still, a piggy bank is a good idea, because 5-year-olds can understand that money belongs in a safe place. In one way, your child’s focus on the present can work to her benefit; after the quarter clangs into the piggy bank, she may forget all about it.
The concept of “saving up” will make more sense at this age. But because the future is still a murky concept, shorter-term savings goals will be easier to grasp. So hand your budding money manager that quarter, and she might deposit it in her piggy bank for a couple of days, sweet-talk another quarter from Grandpa, and immediately buy a pack of gum.
During the first-grade school year, many children start learning how to count by fives and tens, so they’ll be able to add up nickels and dimes. And at 6, your child will likely get the difference between a “want” and a “need,” says elementary school teacher Laura Gerrity.
Your child is starting to appreciate that she has choices when it comes to money. Give her a quarter, and you may see the wheels spinning as she weighs putting it into the piggy bank versus popping it into the nearest gumball machine. She’s also bound to realize by now that a quarter isn’t much to get excited about!
Budding math skills enable many second graders to add combinations of nickels, dimes, and quarters together.
“By age 7 or 8, children will have a good notion of what the real value of a quarter is. They’ll know that it’s five fives, or 25 ones,” says Daniel. So the gift of a quarter may inspire a jaded eye-roll rather than bouncing glee.
But the good news is that your 8-year-old is getting better at “delayed gratification.” She also has a better grasp of the future. So longer-term savings goals are much more feasible at this age. If your child has been exposed to the idea that “every little bit counts,” she may piggy bank the quarter with a sense of satisfaction that she’s a little closer to buying that scooter.