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How to Teach Finance to Kids (2 yrs & Up)

Does this sound silly to you?

Yes, you can teach kids about Finance. You can introduce this concept as early as 2 years old.

"It is not Money itself that causes children to feel entitled; it is having money without a clear sense of personal purpose, the meaning of money, and its LIMITS in life."

~ Ann Freel, Director of Family Education at Northern Trust

The way we introduced the concept of Finance to Kara is through the Montessori Principle of "CONCRETE BEFORE ABSTRACT."

Montessori kids use concrete hands-on learning materials that make abstract concepts more clear. Lessons and activities are introduced simply and concretely in the early years (before age 6, which is the point they begin to think in an abstract manner).

1: Demonstrate the concept of Quantity.

Kara understood the concept of quantity before she learned the number symbols. Asking a child to recite 1 to 10 or to recognize the numbers doesn't really mean anything if the child doesn't understand how many units or objects are equivalent to the number symbol.

One of the best ways to introduce quantity is by using a Spindle Box (Montessori believed that children need to use concrete materials to PHYSICALLY see what happens during a mathematical process. So, she designed several materials for Math).

Here's the good news -- YOU CAN CREATE YOUR OWN.

Aside from our dog (Albus Labrador) using the toilet paper board as a chew toy from time to time, we used these to create a DIY Spindle Box!

Putting the corresponding number of twigs or sticks must be demonstrated for the child to understand the concept of zero. In our case, Kara first knew what “none” or zero meant whenever she runs out of food. She would say “no more” or “zero”.

Once the child is familiar with the quantity representing the number symbol, this turns into a self-correcting activity, there are exactly 45 twigs to be used. Aside from these materials, you can just put dividers in a shoe box or any box and use popsicle sticks instead of twigs. There are so many ways to come up with your own.

2: Explain What is Money.

After she learned the concept of quantity, (especially zero) - we started explaining what is Money.

Money is stored value over time but that is way too technical to explain to a 2 or 3 year old. It will be easier for them to understand the concept of exchange and the concept of "limits". Whenever we're at playgroups, and Kara wants to use a material that is currently being used by another child, she would ask permission if she can use it or offer the child an alternative ("let's exchange!")

It was the first concrete experience of barter for her. Now, she knows - she can't have anything she wants. There are conditions to be met.

Then, whenever we're at the mall, Kara would sometimes ask me to get her a toy or some snacks. There were instances when she'd pick more than one toy and I'd say "You can only choose 1 toy because Mama's money cannot be exchanged for more than 1" (the concept of Money being finite). Of course, she doesn't know the "value of goods" yet, but she understands that not everything is FREE and in a simple manner, money is limited.

3. Give them the Power of Choice: Save (Invest), Spend, or Share.

This is another Montessori Principle we embrace: giving children options. At home, Kara decides what activity she wants to work on, we don't dictate (but we do limit the options based on what is age appropriate). This helps us learn what she finds interesting and nothing beats seeing a child HAPPY and focused because she is very interested.

Likewise, we also give her choices on how she wants to use her allowance. We started giving Kara P50 weekly and she would decide what to do with it. She has a Hello Kitty Bank at home where she puts the money she wants to save. The rest, she keeps in her wallet.

One time while we were at Greenbelt, Kara asked me to get her the Jamaican Patty and I said she has to pay for it. She handed me P50. She noticed, Kim (her yaya) didn't have any so she gave me another P50 to get food for Kim.

I told her: "Your wallet will be empty, anak." Kara said: "It's okay mama. Ate is hungry too!"

Kim said: "Thank You, Kara!' and Kara replied with "Welcome, Ate Kim!"

This is one of the many moments that Kara made Kim or I cry. When you ask her for money and if she has, she will give you some. I would ask why she'd give it away and she'd say "I'm not using it mama."

The concept of "saving" is much harder to demonstrate but we did this by telling Kara that she needs to come up with 10 pcs of P50 to get the Paw Patrol coloring book she wanted (it's P499). She knows she has to wait for some time because we only give her allowance weekly.


There you go!

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~ Mommy K

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