In the adult world, money has always been one of those subjects that people will shy away from or will often feel too uncomfortable to bring up in casual conversation. Just like politics or religion, we all know that it’s a topic that can easily get heated or kill the mood!

However, when it comes to our little ones, there comes a point when kick-starting conversations about money becomes a necessary part of your parenting journey. And although it’s tempting to shield your child from the big, scary world of finance and just hand them their pocket money for a cupcake from their school bake sale forever, it’s healthy and necessary to prepare them for their financial future early on.

So, before we delve into some ways you can approach your child about money and have constructive conversations, let’s understand more about why it’s so important to have these conversations in the first place.

Why is talking to your preschooler about money important?

It’s well known that some people believe it’s not the right thing to do to talk to their children about money at all. And when it comes to some money-related subjects, such as how much you earn, which parent makes more, or how much you pay the babysitter, frankly, they’re not wrong. However, just because some financial topics are off-limits, it doesn’t mean that others shouldn’t happen.

As their parent, it’s good to be aware that you have perhaps the biggest influence over your child’s perception of money and how they manage it as they grow up. The conversations you have with them now and the way in which you present the concept of money will equip them with the right knowledge and skills to create a secure future for themselves one day. Even though your child is still very young, remember that their brain will be like a sponge at this age! Children are eager and ready to learn, they take in new information very quickly, and it may take you by surprise how quickly they pick up monetary concepts.

Now that we’ve understood a bit more about why talking to your preschooler about money is important, let’s outline some tips which will help you take advantage of the conversations that you have with them on the subject.

How can I talk to my preschooler about money?

Start earlier than you think you should.

Even though the preschool age will feel a little premature to start talking to your child about money, research shows that most children are able to grasp economic ideas at this stage. Concepts like making choices, delaying gratification, value, and exchange are all within the boundaries of what your child can understand at this age. Remember, even if it doesn’t look like they’re grasping what you’re saying, more will be going in than you think!

Keep it age appropriate.

Although it’s healthy to have open, honest conversations about money, don’t forget that you always need to adapt the message you’re conveying to suit your child’s age. Although your child may be perceptive and willing to learn, you also need to consider that some subject matters, like debt, may be difficult for them to face at this point.

Use anecdotes.

Launching into lecture mode is easy as a parent. We know you want to educate your kids, and over-talking can be the natural consequence of this. However, it’s natural for kids to tune out when their parent talks for too long, and end up doing the opposite of what we were trying to get them to do! Instead, using stories to convey a point can be much more effective. For example, you could easily teach your child a positive lesson through a funny story about a financial blunder you experienced, which taught you a lesson in the end.

Don’t lie about your money past, but don’t overshare

Most of us have run into some money troubles at some point throughout our lives. Although you may have long made peace with any financial mistakes you may have made, it’s not a good idea to overshare with your child about them. Remember, although you may look back on these memories with a sense of lightheartedness, if you accidentally talk to your child about them in this manner, it may make the wrong impression. Pick and choose which experiences you disclose to them, as this will influence their own decisions in the future.

Never lie about how much money you have on you.

We all know how trying it can be to have your child complaining that they want the brand-new toy that’s in the window every time you pass their favourite toy shop. Of course, it’s natural to immediately jump to saying something like, ‘I don’t have any money on me’ to avoid a tantrum. However, lying about how much money you have on you is misleading. Instead, practice straight talk by saying something like, ‘No, I don’t think we need to spend any money on that now.’ This sets a much better example, and your child won’t be able to catch you in a lie the next time you purchase something!

Identify your financial baggage – then leave it behind.

By the time we reach adulthood, most of us have collected some financial baggage. Whether this means you’ve previously found saving difficult, have splurged money without thinking, or run into debt, it’s good to come to terms with any financial problems you’ve had in the past. However, once coming to terms with it, it’s good to let it go, and most importantly, not put it onto your kids! Always try to approach money positively when talking to them about it, and don’t let any negative experiences you’ve had impact how they go on to see it.

Keep the money fights behind closed doors – and don’t let your kids get caught in the middle.

Keeping financial peace can be difficult between partners, especially when they have a family. However, research has shown that children whose parents fought about money when they were younger were much more likely to owe money to others or collect debt on their credit cards. Where possible, always try to shield your child from big money disagreements you may have.

Don’t expect your child to have money skills if all you’ve given them is money.

When you become a parent, it’s normal to want to give your child every gift and every opportunity you can come by. However, over-providing for your child without teaching them the value of money or the hard work it takes to buy things of worth can actually work against you. Always make an effort to balance what you buy for your child, and how much money you hand over.

How do I talk to my preschooler about money?

It can be a tricky subject but there are ways of laying good groundwork for the future.