Research: You can teach preschoolers about money

MADISON, Wis. (06/15/09)--When it comes to money, your preschooler is learning something every day, even if only by watching you at the store. If you want to send a particular message about money's proper use and importance, start now.

A research study released earlier this month by the University of Wisconsin-Madison revealed that very young children--as young as three years of age--are capable of learning key money concepts that help them become financially literate adults. These skills can be developed from social interaction and observation, and parents play a key role.

Take time to teach the basics of sharing, saving and spending. Experts at the Credit Union National Association's Center for Personal Finance offer these tips for introducing money as a topic of discussion with your little one:

• Look for the teachable moment. You don't need a classroom to teach. A "teachable moment" is any time that your child is ready for new ideas. For example, getting cash from an ATM is a good time to explain that you put money into the credit union or bank earlier. The machine gives you your money back when you need it.

• Let children make mistakes. Losing money and being unhappy with poor spending decisions are more effective lessons than a lecture.

• Watch TV together. Preschoolers cannot understand the difference between TV programs and commercials. Choose TV shows to watch with your child. Talk about the ads and what they are selling. Explain that choosing what to buy is like choosing what TV shows to watch.

For more information, watch "Thrive by Five: Teaching Your Preschooler About Money" in Home & Family Finance Resource Center.