Did you hear that mom at Target the other day babbling to her 1-year-old about unit prices, coupons and wants and needs?
Um, that was me.
Kids start asking about -- and for -- money not long after they stop trying to eat it. I've often wondered why we wait so long to teach financial literacy to little ones.
April is financial literacy month, and as in years past, most of the programming is for middle and high school kids. I'd argue that's about a decade too late.
Personal finance "is such an integral part of daily life -- kids are making trades, they're worrying about who gets what, they're exchanging things all the time," Charles Kalish, a professor of educational psychology at the University of Wisconsin, points out. Kids come up with theories relating to economics and finance based on what they hear and see.
Kalish, who co-wrote a paper on financial literacy for young children, says parents should help their kids flesh out these theories and correct misconceptions. For example, kids tend to operate under the "you're nice to me, I'm nice to you" philosophy, Kalish said. A child who has $10 might think the store clerk is "mean" if he won't sell an item that costs $20. But in reality, "there's a price and it's just the way it is."
Dara Duguay, past head of the Jump$tart Coalition for Personal Financial Literacy, a group which aims to increase financial education in schools, suggests parents explain that ATMs aren't "magic money machines." Rather, they spit out money that you had to work for and then deposit in a bank.
And when your kids beg for pricey goodies at the grocery store, don't just say "no." Explain your reasoning and ask the kiddos to help you prioritize purchases, or search for coupons for that item when you get home so you can buy it the next time.
Rob Grunewald, an economist with the Federal Reserve Bank of Minneapolis who has done research about the economic benefits of early childhood education, suggests parents introduce the concept of delayed gratification to young kids, because it's "an important attribute for saving money." Resist the temptation to stop the begging by buying the coveted toy. Encourage your child to save up for the purchase instead, or to save that birthday fiver by offering to match it. But don't be discouraged if your children won't wait no matter how sweet the reward; it may be related to brain development.
"We look and say 'Why can't you look down the candy aisle of the store and realize that you're actually much better off saving your money than buying a piece of candy right now?' ... but maybe kids feel these desires more intensely than we do," Kalish said. It's not an easy one for some adults, either.
Parents should also consider what messages they are inadvertently sharing with their kids. As any parent who has let a bad word slip knows all too well, children are sponges. I didn't sit down my daughter when she was 2 years old to explain the difference between wants and needs. But that didn't stop her from chirping "You don't need that" when I was admiring a retro-inspired dishtowel on a shopping trip. Broadcast your inner financial monologue for your kids; you'll be surprised how much they retain.
Beyond just talking, you can explore economic principles through reading children's books and surfing online. At a recent meeting of the local Jump$tart chapter, Jane Stockman, education program coordinator with the Minnesota Council on Economic Education, shared a list of books and lesson plans (available at www.mcee.umn.edu) that teach kids about concepts such as trade-offs, scarcity and saving. The Credit Union National Association's Thrive By Five program is also a great resource, as is the Youth and Money page from the University of Minnesota Extension Service.
Kara McGuire • 612-673-7293 or kmcguire@startribune.com. Read her blog: www.startribune.com/kablog.
