How to teach a young child money mindfulness

An important task as a parent is to help instill or foster life skills in your child so that they are equipped to stand on their own two feet eventually to make their own path in the world. We simply don’t yet know how the future will play out – the exact impacts of climate change, artificial intelligence, the rise of new economic giants (most notably China), the ever-widening chasm between rich and marginalised, new inventions to fill new gaps yet unknown… this will be their future which we simply can’t advise on, but what we do know is that managing ones money will always be a crucial life skill (and yes, I do think the capitalist system will continue to prevail).

However, the title of this post is somewhat of a misnomer. When it comes to children, it’s not so much what we teach as parents but what we do ourselves. If they can identify with us (and don’t feel the need to rebel), then children will model our attitudes and our behaviour. It will be their normal. And when I say this is a ‘life skill’, in my mind, it’s a nurtured attitude and ability – not simply a collection of facts that you tell someone like a school lesson and then they do it. Valuing money is one of the greatest gifts from my parents. I learned it involves persistence, regularity, holding back and looking before you leap. It was also a very cautious stance, which I found helpful to a lesser degree, but I do have them to thank.

In this post, I will reflect some ways in which I try to cultivate money mindfulness as well as teach the value of ‘things’ to my 3-year-old. Granted, he is still very young and different strategies will be needed at different ages that we’ve not yet reached, but 2 or 3 years is a fantastic time to start. I was really quite surprised by how much I could write on this matter! If you have any further ideas, I would also love to hear them!

Nurturing your child’s understanding of money and the power of the long game

The earliest things we’ve explicitly taught our child are: ‘money buys things’, ‘we need to work so we get coins to buy things’, and ‘we save money to buy things’. Although we pay with card for most things these days (contactless is so toddler friendly!), Little Firelite (LF) is exposed to hard cash (mostly coins) quite often. We get him to pay for small things at shops and he got a lovely train moneybox for his 2^nd birthday. We occasionally give him a coin or two for his moneybox, sometimes just when we feel like it and occasionally when he’s done something good. He loves putting the coins in – ker-ching!

So far in his 1.5 years of owning this moneybox, we’ve emptied it just once to buy a toy from a local toy shop. He knows he is saving up for another toy train. When we go to a shop, he seems to know exactly what he wants, which I find mind-blowing. Anyway, I hope that here, we are teaching him the power of the long game (though admittedly, it would be trickier if he could take £1 from his moneybox now and walk himself to the shop to buy a chocolate bar!).

Do you know the marshmallow experiment? Young children (older than 3) are told they can eat a marshmallow (or other treat of choice) but if they resist for 15 minutes, they will have 2 marshmallows (or other treat). This is supposedly a test of the ability to ‘defer gratification’; those who pass the test at 4-6 years do better in high school exams. I believe that the ability to defer instant gratification is key to dealing well with money – specifically, saving. When I did the experiment with LF (with 2 Revels, and a 10 min wait), I could see the level of determination BECAUSE he loves chocolate! I was surprised by his persistence. I didn’t link this to finances at the time (honest!), but I believe now he has the ‘mental hardware’ for saving and resisting temptation, and I hope to harness that in the right directions.

However, before you cast judgement about my overly high parental expectations or self-congratulatory manner, I’d add that LF is also very social and likes to impress his friends, so that may become the future sticking point when one day he comes home with the flashiest (read eye-stingingly expensive) trainers ever! I already feel it in my bones that this will happen (though happy to eat my words if not)! He’s already quite particular about shoes and loves talking about a new thing he has! I’ll think about how to cross that bridge when I get closer to it… I did say once that life is all about conflicting values, didn’t I? Okay, so the important thing is valuing those expensive trainers. We can’t tell him his friends won’t hold him in higher esteem for them, because it may not be true.

Do we unintentionally communicate that work is the most important thing in life?

If you’re a parent who works a lot of hours per week, then your actions say something to your child, whether you like it or not. This has been a difficult one for me to digest (and still working on it). As LF has become more verbal, it’s become apparent in his mind that work is the thing that he has to compete with, though of course he has never said that.

Recently, I have been verbally emphasising that I don’t really want to go to work sometimes but I have to, because that’s how we get coins to buy things and so we can do nice things together because they cost money. I’m acutely aware that when we take him to nursery, we are always saying we ‘have to go to work now’ which I didn’t realise until recently could sound like ‘we prefer work to being with you’. How sad. This point came home to me when I asked him ‘Where does mummy like to go?’ and of course he said ‘work’.

A secondary reason why I emphasise that ‘I don’t really want to go to work but I have to’ is that he’s been resisting going to nursery occasionally (often, you know, he’s mid-programme and like all of us, he doesn’t feel like it). I am kind of saying that sometimes in life we need to do things we don’t really want to be doing and this explains my behaviour. I definitely don’t want him thinking I love work more than him, but it will also help if he can appreciate that money is important for everything that we own and things we do together. Sure, the park doesn’t cost money and neither does visiting people’s houses within walking distance, but almost everything else you do with a child does!

Socialising children to appreciate the good things in life is the most effective anti-materialism approach

I’m seeing that it can be a bit tricky to give the impression to young children that ‘money is something to be valued’ and ‘in the end, things other than money are the most important in life’. While we as parents may want to emphasise the former, we may also unintentionally instil a hoarding tendency or a fear about losing money that undermines taking calculated risks with finances (speculating to accumulate). We may simply sound greedy (‘money is good!’) and overly concerned about financial status.

So, it’s just as important (indeed, more so!) to communicate (by showing and telling) that relationships and community, personal development and hobbies, and experiences are the most important things in life. In all of these things, money is an enabler and it needn’t be expensive.

By spending quality time with our kids, by cultivating playfulness and imaginative games, by facilitating friendships and close relationships with extended family, we are implicitly teaching that the real valuable stuff of life doesn’t really cost. Indeed, the most creative kids are those who have limited resources to create their own fun. They had time to be bored. By having an exact toy for everything to be played, there’s no room left for imagination.

I am starting to see how our relationship with money tells us so much about our relationship with life. I wonder if many people spend to fill a void caused by difficulties in maintaining meaningful relationships and an inability to appreciate experiences and cultivate interests and hobbies.

Intentionally holding back some toys, giving away toys and even requesting no toys

Perhaps the real challenge today for parents of young children is the clutter. Keeping the clutter at bay translates too lots of toys, books, and child-related paraphernalia with no proper home for them. We have this challenge ourselves. Without making a conscious effort, the toys can get out of control and having lots of toys does is likely not to make for a better play experience. This has been shown to be true through research. Well meaning rels and friends give toys and before we know it, each birthday and Christmas comes with it a new torrential downpour of plastic! It’s not possible for any human to appreciate this many toys, never mind a young child who is still developing their attentional skills.

We try to take some toys out of circulation, though recently he’s been good at finding these! If he stops playing with certain toys, we pass them on to his cousin or charity. We explain why giving is good so that the toy can be played with by other children. Of course, we don’t ask him if he wants to give his toy away as the answer is always ‘no’. (‘Human nature’ is the thought that comes to mind, though it may be the precursor to what Simple Life Compass calls ‘Just In Case’ thinking).

We always have a carrier bag ‘on the go’ of things we’re going to give away (soon). LF has never once said ‘I want X’ after we’d given X away. We raise hundreds each year in Oxfam’s Tag-Your-Bag scheme, which I highly recommend. I tell LF that it all helps children like him but who are not lucky enough to have many things. I mindful not to give him a guilt complex about it. I do occasionally say how lucky we are; I try to frame it as ‘we’.  

On turning 3, LF was too young to understand presents but he loves his friends and family. So, we organised a themed birthday party for him, and we asked on the invite for no gifts please as LF is lucky enough to have all the toys he needs already. If they felt they really wanted to give something, I gave some suggestions of what they could get from charity shops. This worked really well (even if some ignored it or didn’t notice it). We wouldn’t have had the ‘nerve’ to do this if it wasn’t for the fact that one of LF’s friends’ parents did the same thing (with the addition of donating to a particular charity, which we ourselves didn’t feel appropriate as LF wasn’t old enough to make that his choice). I think we’ll probably do it again next year, only for birthdays, not Christmas (since we’re all opening gifts as Christmas!).

Try not to have a strong division between the adult and child world: Include them

We don’t grocery shop online. LF sees how we need to stock up our fridge and food cupboard each week with food, including all those foods he likes. While he resists going food shopping (more so previously), he now sees how our fridge gets barer as the week goes on. Some weeks, we go to the local grocers or the small Coop with his (balance) bike and he can pull the basket-trolley and help mummy and daddy select fruit and veg -It’s very tangible and I can see him taking his task of finding the cleanest mushrooms quite seriously! He can see the numbers go through on the till and he is getting some sense of the power of money.

A few days ago, I went to a shop to check out clothes. Yes, I’m guilty for going in for a specific item (warm leggings suitable for work) and came out with a couple of different items instead! The important thing for me was to show that I appreciated these items. We did not talk about the expense of them (for your info, £15 in total), like it was a problem (e.g. shouldn’t have spent it, or too cheap). LF heard me saying that the items were sparkly, like Christmas, and that the leggings were warm. I said I loved the dress, the fabric was nice and soft. I think LF could sense my enjoyment of these items (as I did).

Mr F asked how much the dress was because he reminded me of my rule that if I bought an item £5 or less, I had a ‘one in, two out’ rule in my wardrobe (which is otherwise a ‘one in, one out’ rule). While the latter information will have passed LF by (and some readers, no doubt?), I’m mindful that we are not putting a value judgement on it like ‘don’t spend’ or ‘spend because you’re worth it’, but that we appreciate what we spend. As he gets older, he may gather that I’m intentionally avoiding hoarding clothes. At least, I hope so. I used to be such a hoarder!

My overall point is that I try to include LF in such conversation or at least have them while he’s there and at a level at which he can understand some of it. His dad and I talk about money quite openly. I’ll say ‘how much did the shop cost this week?’ and I’ll occasionally look through the receipt in front of our child while on the way home. I am also starting to include him in present shopping sometimes.

And we give him coins to put in tip jars and charity boxes, each time explaining that we do it to say thank you and/or to help other people/animals who don’t have many things or who are poorly. Finding simpler language to explain things to our little ones does really help with perspective too. I feel like I’m growing as a person (slowly!).

Teaching about money itself: From bank accounts to play time

LF has his own bank account but he’s too young to understand that yet. When I was 9 or 10, our school started offering bank accounts to children through a local Nat West Bank, and I opened a children’s account, at that time offering 10% interest. My mum explained this to me. Because the interest rate was so high, the compounding was very visible, and she explained compound interest. I thought bank accounts were the best thing since Cabbage Patch Kids! A win-win-win (the first one is keeping your money safe for you in the first place).

At the moment, I am teaching LF what all the coins are. He loves showing off his knowledge of ‘the numbers’ but he is too young to understand how they represent different values symbolically. However, we have a nice coin game which involves us going though what a 1p through to a 50p look like, then him ‘guessing’ what number each coin is and which other one it matches. The fact that a lot of the coins have different patterns on them makes it a bit tricky at times! I know we don’t need to worry about LF not getting the hang of money but each bit of info builds on the last. It’s great having shared games that have real life relevance (yes, I exclude Baby Shark from this!).

We have also started playing shop. He loves it. He asks to play shop quite often. We had been using occasional real coins in this pretend play, and mummy had made some pretend paper notes and coins, but it was hard for him to understand the paper coins and notes. His Christmas gift suggestions list made by yours truly includes a till and real pretend (!) money – so that it resembles the real stuff a bit more. We are not giving the right amounts of change yet in our play, but it’s lovely to see how he is trying to mimic what he understands to be the real world in his play.

A conundrum about Santa Claus and gifts

It’s the pervading cultural expectation that we as parents would suggest that Father Christmas is real and really does go down your chimney at Christmas to give gifts to good children the world over. It would be unkind to remove the ‘magic’ of Christmas by suggesting Santa is just a story, and a good parent would put a carrot and mince pie out for Santa and his reindeer on Christmas eve. My position on this was one of honesty, but given that we don’t talk about whether other stories or films are true or not (unless scared), it’s not yet come to light whether Santa is real or not!

While this story is a bit of fun (certainly for parents and children alike!), it also perpetuates certain messages about material goods.  First, that ‘good’ children get presents (especially ones they’ve asked for, say in a letter to Santa) might lead children to equate the most expensive gadgets to more obedient / better behaved / somehow inherently better children. It also fuels consumerism as it’s culturally celebrated to spoil your kids then, as mediated by a jocular god-like omniscient and all-judging mythical figure. Second, that ‘naughty’ children won’t get presents may imply that children who don’t get what they wanted (e.g. from less well-off families, families who don’t celebrate Christmas as they are from a different cultural or religious background) are somehow bad. What are your thoughts on this?

Create your own family traditions

I read on some parenting forum that one nice thing to do is create your own family traditions and rituals especially for the holiday season, which I thought was a fine idea, especially if you’re not religious. Family rituals help cement family relationships, express appreciation and are fun! They also help move the emphasis away from expensive gifts, although I appreciate gifts as much as the next person (or more). The only thing I can say here really is that you can’t really ‘force’ traditions, they tend to form organically. One idea that comes to mind is creating a shoe box of things to give to those less fortunate than us – I have heard of this on a local forum so will look into it.

But our current strongest contender is going on holiday the week before Christmas – which we’ll be doing the second year running. While I can’t say it’s not costly, it is a ‘cheap and cheerful’ holiday, with the focus on spending time together, experiencing new things together, escaping the daily grind and chores (an all inclusive), being somewhere warmish, and escaping the craziness of consumerist culture. Five weeks minus 1 day to go!

But will it all work??

Of course, after all this, we do not yet know whether our various attempts at teaching about the value of money will pay off. Only the future will tell and we appreciate also that our boy is a human with his own mind, personality and ideas. We love him regardless. He will understand soon enough that he has pretty frugal parents. He notices nearly everyone’s house has a car and has asked why we don’t have one. ‘Well,’ I said, ‘we don’t need one. We can use our feet or pram, bike or scooter, and get the bus and train or taxi. We get exercise and fresh air and it keeps us well’. That satisfied him… for now.

Please feel free to post any comments or ideas, whether you’re a parent or not. 🙂 Clearly I had much more to say than I realised by far! Thanks for reading.