Ages 3-5: Financial Readiness

Help Kids Use Money Well

• Be intentional and consistent about money. For example, give a weekly allowance where you provide the same amount of money each time. Be clear about what you will and will not pay for. Otherwise, kids will think they can ask you to pay for everything.

• Know that spending is the number-one money topic that parents and kids identify as most important, according to Search Institute research for Capital One. Both parents and kids struggle with spending, overspending, and the desire to get more money. It’s a common tension in almost every household.

• Create money boxes for your young child. Make four boxes: one for spending, one for saving, one for giving, and one for taxes. Each week when you give an allowance, give your child the allowance in coins that easily slip into each box. For example, if you give your child a dollar, have your child put one dime in the savings box, one dime in the giving box, one dime in the taxes box, and seven dimes in the spending box. This gives young children concrete experience in dealing with percentages.

• Help preschoolers learn how to recognize different coins. Pennies are easy. They’re a different color. Show how a nickel has a smooth side. Talk about how the big coin is worth the most (the quarter). Expect kids to take a long time in recognizing nickels and dimes because it’s illogical that a dime (that’s worth more than a nickel) is smaller than the nickel.

• Teach young children that once money is spent, it’s gone. To teach this concept well, let them feel what it’s like not to have money to spend between their shopping times.

Help Kids Save Money

• Talk about saving in a positive way. Explain what you’re saving for and how you’re excited about that.

• Get your child a savings bank and a spending bank. (Or make them out of boxes.) Every time your child gets money, encourage your child to put money into both boxes.

• When you shop with your child, don’t get into the habit of always buying your child something. Say, “We need to save our money. It’s important not to buy something every time we go to the store.”

• Talk about how you save money and why. Kids learn by what parents say—and do.

• Be honest about the ups and downs of saving money. If it were always easy to save money, more people would do it.

Help Kids Give Money

• The younger children are when they start giving money, the more likely they’ll be generous when they’re older. Encourage your kids to give coins to worthy causes and to save money to help others.

• Teach children about worthwhile causes, such as saving the rainforests (visit the kid-friendly website: Or adopt an endangered species through the World Wildlife Fund ( and get a matching stuffed animal.

• Create a giving box that sits in a prominent place in your home. Encourage family members to place coins in the giving box. When it’s full, give the money to a worthy cause, such as a local food pantry or homeless shelter.

• As a family, give money. Talk about the places you give money to and why. Kids notice and learn from the adults around them.

• Make giving fun. Attend preschool and child care fundraisers.

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