“100 pennies is a lot!”

Most of the year we look forward to Saturday mornings at the local farmer’s market. We are fortunate to live walking distance from the city market. Every Saturday morning, we walk downtown and stop by the ATM (aka TYME machine) on the way to get cash for whatever fresh produce (and coffee) tickle our taste buds that morning. Fresh air, good food and worn out kids; a win for all. (market picture)

Sometimes at the market, Mr. PW and I casually talk about why we don’t have enough money for certain things we would like (ahem, Tesla), and it’s no wonder our oldest tells us to just go to the place downtown where we get money. We put in a card, push a few buttons and outcomes cash. Duh! To her, the cash supply is endless. We make most of our purchases with credit cards, and pay off our balances in full every month, so she understands there are different forms of money. In fact, she is often the one to insert our credit card when grocery shopping or entering the prompts at the ATM. The suggestion to keep putting in cards and pushing buttons to get enough money to buy a car is a reasonable solution for a four year old. This theory started an attempted conversation of money, at a four year old level.

I tried explaining that we can only get so much money out the ATM, and the money that is available is money that Mr. PW and I make from working at the hospital. This started the all-too familiar game of “Why?” I was quickly questioned into a corner with no satisfying response.

My stuttering conversation with our oldest daughter made me wonder when and how is a good time to discuss money with our children? It seems reasonable to start with the fact that we work to get money, and that we have a limited supply of money, all of which we worked hard for. I fear this would start teaching her to despise work, like George Costanza. Society pushes that concept on them enough already. We want our girls to have passion for their job and view their work as a positive thing, like Bill Nye the Science Guy. Is there a “right” way to teach young kids about money? Mr. PW and I discussing our finances and purchases over dinner has already made money a routine conversation in our house. But I still wonder, what is a healthy way to introduce financial respect to children?

A quick Google search led me to Money as you Grow, part of the Consumer Financial Protection Bureau. This website has an abundance of resources, including games, books and conversation starters for ages three and up. In short, no matter how desperately I want to believe that our child is advanced, four years old is too young to understand the abstract theories of money. Rather, this is a time to focus on executive functioning skills. Kids 3-5 years old should be learning how to complete tasks, practice delayed gratification (think The Marshmallow Test) and think before acting. It’s not unusual to meet an adult still struggling with these skills. Focusing on executive functioning in early childhood leads to healthier financial habits as young adults. Some of the recommended games include sorting coins or having the child repeat instructions back to you. Talk about the ads you see on TV or when you’re out, explain that the companies are just trying to get your money. I’ve discussed this a few times with our daughter, and now she’s quick to point it out, though I’m not sure if she’s aware that she has the choice to comply with the marketing ploy or to hold on to her earnings.

Once kids reach six years old, they are ready to put their executive functioning skills to work building healthy financial habits. This is the time to talk with them about abstract concepts such as working for money and the choice of spending, saving and giving. When they have the interest and focus, sit down and explain a recent receipt or bank statement with them. At this point in their development, they’re observing how adult role models manage money and are preparing to manage their own money. Do they see money as a disposable resource as long as there are enough credit cards or is every transaction made with cash? I remember asking my parents why they paid with credit cards, I was used to cash and the checkbook. They explained that credit cards were for emergencies. I’ve carried that with me through life and only make purchases for which I have money in the bank.

When your kids reach teenage years, it’s time to let them practice managing their money. This includes working for money, saving, giving and spending. Now is the time to get into the dirty details of finances if they’re interested. Describe the components of a paycheck. They’re sure to be floored when they see how much is taken away in taxes, social security and Medicare. Consider pulling out your pay stub, or W2, for comparison. Discuss the cost of private college versus a public state school versus community college. Mr. PW and and I had different experiences in college, and one of us is still paying for it. Emphasize the importance of paying off credit cards each month and having an emergency fund.


We’re interested to hear your thoughts. What do you remember from how your family discussed finances? How are you teaching your kids good financial health and at what ages? Please share your family conversations and experiences.

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