Never Too Early: Teaching Pre-Kinders About Money

High finance is way over your toddler’s head, no matter how bright or precocious she might be. Some children this age are still mastering counting, and few have moved on to real arithmetic. That doesn’t mean you can’t begin teaching them the fundamentals of economy and responsibility — the key factors of good adult decisions about money. 

Key Concepts

For pre-kinders, teaching about money rarely involves money. Instead, you’ll work with your child on the concepts that make money and economies work. 

The Relationship Between Earning and Spending

If you ever bribed your kid with a doughnut at the end of a grocery shopping trip, you’ve already introduced this concept. You can tie the “do this/get that” concept behind all earned money through rewarding your child for helping you with various tasks around the house. 

Limited Resources

Whether you’re dealing with cookies or screen time, even pre-kinders can understand the concept of having a finite amount of something. One particularly powerful tool for this topic is having your child distribute something among members of a group — such as dividing cookies evenly from a package. Understanding about limited resources is key to understanding scarcity, which is a vital part of getting what money is all about. 

Some Things Cost More Than Others

This is tricky for toddlers, since they rarely understand the difference between $10 and $100 — but it’s not completely out of their ability to grasp. The key is to tie their effort to earning things of higher value or importance…and to remember that their concept of “importance” often bears no resemblance to your own. Snack time is a good opportunity to introduce this concept, for example, allowing your toddler to choose between options of different sizes and perceived values.

Conditional Rewards

Not all parents love this concept at this age, fearing that it could become confused with conditional love. However, pre-kinders can understand about receiving something they want only if they accomplish a task. Author and economist Stephen Levitt tells a story about using this concept to potty-train his daughter, with amusing results. You shouldn’t make every task or situation about the reward your child can glean, but attaching rewards to certain specific and consistent behaviors is a powerful teaching tool. 


Whatever lessons you choose to teach your youngest children about money, always keep in mind why you’re teaching these lessons. Are you laying groundwork for later education? Bribing your child to comply with your wishes? Teaching your child about the world? Understanding your reasons will inform which lessons you choose, and how to teach them.