Does Money Grow on Tress? | BCCU

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Does Money Grow on Trees?.

on 1/25/2021   -    Share: Share on Facebook Share on Twitter Share on Google+

Financial Tips For Preschoolers

does money grow on treesDoes Money Grow on Trees?

"Um no, silly," said 3-year-old Rose.

It seems like this preschooler has some idea how simple finances work. According to research, as soon as a child has this basic understanding of the concepts of money, it is the best time to start educating them about financial resposibility. Many spending and savings habits are formed by the time a child is 7-years-old.


So it's good to start teaching children as early as possible. Although some believe that financial literacy at this young age is difficult to explain and can place an undue stress on children. 

First, parents should break it down to key concepts to help simplify and make learning as fun as possible for preschoolers. So here are some ways to make money concepts engaging and take away from potential anxiety.

Where does money come from?

Rose knows that it doesn’t grow on trees but young children can still think that there is an infinite amount of money in Mommy or Daddy’s wallet. Some key points to emphasize are only spending the money you have today, realizing there is a limit to how much you can buy with the money you have and earning more money through chores or work.

Easy way to do this is to set up a play store with play money since preschoolers love to pretend. This interactive make-believe game will give them a sense of exchange of money for products and services. It also introduces them to the fact that there is a cost for food and toys and once it’s spent…it’s gone.

The difference between needs and wants

Like most precocious 3-year-olds, Rose said to “buy everything” when asked what you should buy first; things that you need or things that you want. Let’s face it, like Rose, we all would like both. The simple explanation is needs are things that we can’t survive without like water, food, shelter or clothes while wants are everything else.

Playing a matching game is a good way to help them conceptualize what is a need and what is a want.  Make a series of cards that include a mixture of wants and needs, when they have a correct match they put that in the need or want pile.  You can even incent by giving them a penny or nickel for each card sorted correctly.

The value of earning money

The preschooler age is a fantastic time to start explaining spending, savings and giving goals. You can set up an allowance system for small chores, so they can understand the relationship between work and money. Set up three jars with the names of spending, savings and giving, then split any cash earned among the three. I suggest getting rolls of coins to make the dividing among the jars easier. Once the jar reaches its goal, then you can take them to the store for the toy they wanted, to the credit union to put in their kids savings account and to where they want to give. Spending is easy, we all know that. For saving, there are kids’ accounts at most financial institutions including Bellwether’s Kid’s Club Account. Giving could be as simple as toy for a younger sibling, birthday card to a grandmother or a present for a sick friend.

As you can see, you don’t need to create formal lesson plans to teach your preschooler about money. These fun activities can help them become financially savvy.


Lori Holmes
Lori Holmes is the Vice President of Marketing at Bellwether Community Credit Union.

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