Parent’s day: Is it high time we teach personal finance to preschoolers?

This post is for both the newbie and would be parents.

If you ask me, every day is a parent’s day. Parents have no holidays. They work 24*7 only to help their children get the best life. Besides, being a parent is a big responsibility. It is his/her responsibility to bring an overall development of your children, and the right age to begin the development process is from age 3. In this special post, I have to tried to talk about it in detail.

Did you ever play with a cash register as a toddler? If you had, perhaps you would have been a more financially responsible person. The Consumer Financial Protection Board’s recently released report Building Blocks explains how to develop kids as financially capable adults. The report reveals that there are 3 phases of financial capability development and the first phase starts at age 3.

Surprised? Honestly speaking, even I was surprised to know that preschoolers (between 3 and 5 years) can develop executive function through games. This executive function is required when you set short-term or long-term goals, save money, follow a budget, etc.) The report encourages parents to get involved in make-believe play games. For example, you can encourage kids to act as if they are going to the bank as customers. Ask them to create an imaginary grocery list and then shop in the pantry. You can act as the accountant in the store. This make-believe play would teach the basic financial concepts like debit, credit, saving, etc.

Teaching personal finance to preschoolers - A good idea?

In an age where credit cards and debit cards rule our life, it’s imperative to give a basic idea about these financial tools right from the age 3 through make-believe plays. Financial literacy is not yet part of the U.S education system, and the efforts to increase financial awareness is mainly targeted to adult consumers. Some schools advocate that home is the best place to spread financial awareness amongst preschoolers. After all, parents are the best teachers of the world. But the questions is, are American parents qualified to impart financial wisdom amongst preschoolers? These are the people who make impulsive purchases, break budgets, get into credit card debt problems, and under-save for their retirement.

Laura Levine, President and CEO of the Jump$tart Coalition for Personal Finance Literacy says, “Optimally, personal finance would be taught in both the schools and at home”. The problem is the real world is distinctly different from the ideal world. In the real world, adult consumers are not much financially literate. But it is equally true that if schools take an active part in imparting financial wisdom in the playfield, kids who don’t have any chance to get it at home.

After the great recession and subprime mortgage crisis, the momentum to make financial education compulsory in school has increased. High school students are required to complete a personal finance course in order to graduate. But according to Nan Morrison (the CEO of the Council for Economic Education), this is too late.

Just like we teach kids to play games, exercise and brush teeth for building healthy life habits, we should also help them develop healthy financial habits gradually. I’m not saying that we should teach preschoolers spreadsheets or investment portfolios. But at least we can teach them the after-effects of their financial decisions.

A good way to teach personal finance concepts to preschoolers is by reading Aesop’s Fables. Popular stories like Ant and the Grasshopper’s story can help to teach them the concept of hard work and future planning. Read these kinds of stories to your kids at bedtime. You can download CFPB’s book club discussion guides and read the stories like The Purse, A Bargain for Frances, Alexander, Who Used to Be Rich Last Sunday, A Chair for My Mother, Curious George Saves His Pennies, Just Shopping with Mom, etc to your kids at night. These stories have simple money lessons like which preschoolers can easily understand.


Personal finance concepts should be taught to children gradually. Complex financial lessons like compounding interest should be given to teenagers. But a student studying in the fourth grade should be able to differentiate between wants and needs, set long-term and short-term goals, understand product return policies, etc. Teachers have a big responsibility. They have to teach money management skills to children, who are the future consumers and investors. They need to give tools that will help our future consumers and investors make smart financial decisions.

The onus is not just on the teachers. Students also have a responsibility to implement the lessons in real life. Procrastination and inattention would not lead to anything. They need to change their spending behavior. Plus even if personal finance education is made mandatory in school, everything can’t be taught in schools. We don’t know how much effective personal finance education classes will be. But we have to start somewhere. We need to start teaching financial building blocks at an early stage so that children have those habits of thoughts quickly.

  • expertise badge
  • TrustLink logoTrustLink logo
  • Customer ratings on BBB
  • IAPDA logo
  • Calchamber Member
  • Calbar Registered
  • D&B
  • Trustpilot
  • yelp logo