Introduction to Basic Money Concepts for Preschoolers

Introduction to Basic Money Concepts for Preschoolers

Early education in financial management can play a crucial role in nurturing your child’s financial literacy and equipping them with the skills to make informed financial decisions as they grow older.  

Believe it or not, children can understand basic money concepts even before they start formal schooling. By the age of three, kids can grasp the concept of money and its uses. By the time they turn seven, many of their financial habits have already been formed. This is why it’s essential to start teaching your kids about financial literacy as early as possible.

As a parent, you might be wondering how to teach your kids about financial decision-making skills in an easy, approachable, and enjoyable way. Introducing basic money concepts in a playful and age-appropriate manner can be an excellent way to help your preschoolers embark on their first adventures into the world of finance.

What Knowledge Do Preschoolers Have Regarding Money?

Teaching your child about financial concepts starts with understanding their cognitive abilities. By tailoring your approach to their level of understanding, you can help them develop a strong foundation in financial literacy.

Many kids are beginning to understand the idea of money and are able to:

  1. Sort coins according to their colour, size, form, and corresponding number.
  2. Recognise that different purchases require different amounts of money, such as purchasing ice cream versus toys.
  3. Recognise that they must protect their money to prevent losing it.
  4. Observe how much of it they have.

Effective Tips to Teach Your Preschoolers About Money

Discuss about the Money

Teach your child the value and sources of money beyond relying on your own pockets. Even if they’re young, introduce them to concepts like saving, spending, making a living, and working in your everyday conversations. This will prepare them with basic financial knowledge for a successful future.

Teach Counting

Counting is an important life skill that can benefit your kids in many ways. One way to practice counting with your child is to use coins. You can explain to them that more coins mean more money, which can help them understand the concept of having more or less money in the future.

Another way to teach counting is by letting your child identify the various coins’ shapes, sizes, and numbers. This will help them recognize the different types of currency and understand the value associated with each coin. 

By teaching your child how to count and manage money, you are setting them up for financial success in the future.

Establish the Three Principles: Giving, Savings, and Spending

It’s vital to teach your children good financial habits that will benefit them in the future. The following are three crucial financial principles that one must abide by:

  1. Giving
  2. Saving
  3. Spending

A piggy bank, for instance, is a visual tool that is simpler to comprehend than the idea of a savings account. You may use this to teach your child the value of saving, spending, and giving back to others.

Be a Good Example


Providing a positive example for your child is an effective way to teach them about money. Since you are your child’s primary role model, teaching them about money is less crucial than your relationship with money.

Demonstrate responsible spending practices by keeping a budget, conserving money, making on-time credit card and bill payments, and living within your means. Your kids will learn what real financial responsibility looks like from this. By gently introducing these basic money concepts, we lay the foundation for financial literacy in our preschoolers.

Through a blend of play, exploration, and real-life examples, we empower them with essential skills shaping their understanding of money and set them toward a bright financial future.

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