How key is teaching money lessons to toddlers? Here's what experts say

Giving kids money lessons in the early stages of development can prove to be effective in the future.

Money is one of life’s necessities. Inculcating financial wisdom from a young age can be beneficial for people. Even toddlers can be taught about financial literacy, which could save them from taking any wrong steps in the future.

Experts believe inculcating financial literacy from a young age will benefit kids.(Representative image/Unsplash)

April Lewis-Parks, the Director of Financial Education and Communications at Consolidated Credit, told Hola that teaching financial literacy to the kids early means allowing them to see currency as a tool and not a mystery. She further claimed that it is easier to teach good habits from the beginning rather than ensuring that the kids unlearn bad ones later.

The expert continued to reveal that money talks are not a one-time thing. “Money lessons work best when they grow with a child. The earlier kids understand basic money concepts like saving and trade-offs, the better equipped they’ll be to make sound decisions as teens and adults,” she said.

Where should financial literacy lessons begin?

Lewis-Parks says that the money lessons should start off easy for the kids. Elementary students should be taught to identify currency and also that buying items costs money. For the middle schoolers, she claims that they should learn terms like "budget," "needs and wants," and a simple credit system. Instead of explaining it theoretically, parents should try and make it a hands-on experience for the kids. The director of Consolidated Credit explained, “The key is to make it hands-on—let them make small choices with real dollars so the lessons stick.”

Agreeing with Lewis-Parks’ ideas, financial behavior specialist and mom of five, Cara Marksound, told Hola that toddlers and teenagers can exchange money in return for products in stores and can even swipe cards under parental supervision. She said, “Start with toddlers by letting them handle money. Around 6 or 7, take them to the bank to deposit savings and talk about receipts. By age 8, introduce debit cards for small purchases.”

How to build financial confidence among children?

Lewis-Parks pointed out that confidence in handling money comes to children from experience and not from theories. She advocated that adults should allow kids to take responsibility in terms of handling money and finances. Lewis-Park also mentioned that in the digital age, it is important for parents to make the transaction experience tangible. Asking to show statements, track balances, and more could keep the children from falling for any kind of fraud and out-of-hand spending.

Holistic college advisor Tom O’Hare also suggested that these ideas could work. “Learning the rules and gaining responsibility early enables tweens and young adults to navigate financial decisions effectively,” he told Hola.