Early Childhood is absolutely the best time to start teaching your kids about money. Data shows that kids can grasp the concept of saving as early as the age of five. By 2 years old your child has figured out sharing or not --and by 3 he or she might even be a pro at it. Here is our list of the most important money skills for your toddler.
Early Childhood: Ages 3-5
1) Executive Function - According to the Consumer Financial Protection Bureau (CFPB), Executive Function is the most important skill your toddler should work on. This can be defined as "The mental processes that enable us to plan for the future, focus our attention, remember information, and juggle multiple tasks."
I like to think about Executive Function as your toddler's ability to control or manage his/her own behavior. This reminds me of the time when my very own sweet boy, then 2, was unhappy with me in a restaurant--and he threw himself on the floor in a crying fit of rage. I can still remember the pangs of embarrassment I suffered as I tried to collect his wriggling body from the floor. It was a terrible day and felt like the worst parent in the world. That was clearly the opposite of self control...but toddlers will be toddlers and they just can't help it. But seriously, self control is really quite important since it sets the foundation for teaching patience and delayed gratification.
Teaching Tip: Executive Function skills can be built little by little every day. Create incentives for good behavior (we use cupcakes) and consequences for bad behavior (we use "no TV" days). Also practice being slow to meet your child's demands. It is ok to make them wait sometimes. They will cherish that juice, toy, or cheese even more if they had to wait patiently for it. Be sure to lavish praise for little ones that can wait patiently for their turn. Plant the seeds of planning for the future during snack time by encouraging your child to "save some snacks for later". Lastly encourage your child to strengthen his/her ability to focus on a particular activity for a set amount of time. I usually focus on this skill during storytime each night. Achieving more than 10-20 minutes of undivided toddler attention is a real feat.
2) Empathy: Your toddler is already great at understanding his or her own needs. The next step is to help teach your toddler empathy or "the ability to put themselves in the shoes of another child or person". Empathy is such a critical skill to build at this age. Focusing on empathy now will enable you to help your child become both compassionate and caring. Find out more about empathy and giving here.
Teaching Tip: Build empathy for your child by asking questions. If another child drops his candy, ask your child how dropping their own candy would make them feel. Encourage your child to verbalize how that situation would affect them. As parents we can model empathy too. We can show concern and compassion for others through the use of kind words, and giving to others in need.
3) Counting: This is a given. It is never to early to start counting. Most toddlers I know can already count up to 30 well before age 4. Don't assume your baby knows all of his numbers. (I made this mistake and was a little embarrassed when I heard my son counting out loud proudly for a relative.) He was on a roll until he hit 14, somehow good ole 15 got left behind. He didn't even notice and cruised proudly on to 20. Needless to say --this is a still work in progress for our family.
Teaching Tip: This one is easy! We count everything, everywhere, with everybody --out loud.
So there you have it 3 simple money skills to work on if you have a toddler. Drop a comment and let us know if your baby has put any of these skills in practice!