How to talk to your children about money: age 3-4

Talking to children about money at this early age might seem unnecessary. Many parents and carers feel that children shouldn’t be burdened with adult responsibilities like handling money. However, children begin to build attitudes and habits around money as early as five years old. This makes it important to start building good money habits as early as possible.

Does talking about money stress children out?

It can be very empowering to give your children skills and confidence with money. Our research shows that the children who do better with money as adults are:

  • exposed to conversations about money
  • given money on a regular basis (it doesn’t matter how much), and
  • given responsibility for spending and saving.

What can children understand about money in the early years?

Children in this age group can learn to understand a range of things, such as:

  • recognising different coins (for example, by the numbers on them, colour, size and shape)
  • coins and notes are worth different amounts of money
  • things cost different amounts of money, like buying toys and going on a bus
  • money can be spent in different places and on different things
  • money needs to be kept safe
  • when money is gone, it’s gone
  • when they choose to buy something, they will live with the choice they make. If your child has chosen an item for the whole family, for example, they need to recognise the consequence of their purchase on other members of the family.

Money games for kids

At this age, children learn through play and by watching others. Enjoy simple and fun games, or use everyday activities to show your children about money.

Role play: shop

When playing money games with children, follow your children’s lead, let their imagination guide you. As you explore teaching your children about money through play, explain how money works and talk about what you are doing. You can make this role play realistic by trying these ideas:

  • add price tags to items to show that things cost money
  • set a budget for the play shopping trip. When the money is used up you can’t buy more, explain that you have to save up to get more, and enjoy what you have
  • use real coins in the shop to help children learn that money isn’t just play. Let them handle coins and get used to money
  • show your children the difference between the shape and size of the coins
  • use counting to show that two 1p coins equal a 2p coin, five 1p coins equal a 5p coin and so on.

In addition to playing shop, you can make up games with coins, use other role plays and tell stories together.

Around the house

Use everyday events at home to talk to children about money. There are lots of ways to start the conversation.

Watching TV or videos

If your children watch television or videos online, watch with them. Talk about adverts and explain they are trying to get you to spend money and buy things. Talk about what is going on around money in books, films, videos or on TV. For example, when their favourite characters buy something, it’s an opportunity to talk.

The power of a money box for children

Think about having a safe place for your child to keep money, like a money box or piggy bank. Talk about why it is important to keep money safe and how you do it.

Introduce saving by talking about what we want now, and what we will want later. Use counting to show how their money will add up if they save it. Having a safe place to keep the money that the children save will also help to illustrate saving in a visual way.

Going shopping

If you go food shopping and can take your children with you, use it is an opportunity to talk with them about money.

Before you go shopping

There are a number of ways to talk about money during the trip:

  • have the children help you plan what you need to buy, for example, what you need to make their favourite meal
  • make a shopping list together. This will help the children to focus when out shopping, and help you to talk about saving money
  • break the list into things that you need, and things that you want, such as treats
  • check the cupboard together and talk about how you can use what you have and save money. Eat before going out, and talk about how you can save money that way too
  • decide whether there is anything on the list that the children are going to buy themselves from their pocket money. Talk about how much they need to bring along to buy what they need
  • talk about how money needs to be kept safe on the trip, for example in a bag or wallet
  • thank the children for their help.

When you arrive at the supermarket

Shop layouts are designed to make us want to spend more. Helping children to begin to understand that is another conversation you can have on a shopping trip.

As you walk in, explain that shops want you to buy things and spend money. Make it a game to outsmart the shops and spend as little as possible. Point out how the shop is laid out to make you spend more, for example:

  • fruit and veg are often at the entrance as they make a big profit on these
  • essentials are scattered throughout, often at the edges—this means you have to walk past everything else to get to them
  • more expensive products are at eye level, cheaper brands down low
  • children’s products are often at their eye level.

Remind the children that you’ve agreed to find and buy the things on the list.

As you walk around the shop

  • If the children ask for things that aren’t on the list, remind them they have to stick to the list as that is what you have money for today
  • Have the children help you to find the things on the list
  • Help the children to compare prices
  • Look at packaging and talk about how they market to children
  • Appreciate the children for their good behaviour and thank them for being helpful.

At the till

  • Have the children put things on the belt to keep them busy
  • Ask the children to help you to pay. If paying by cash, have them give the cashier the money
  • If paying by card, explain where the money to pay for this comes from
  • Explain about keeping money and bank cards safe
  • Check that the receipt is correct - does it match the list?
  • Appreciate the children for their help.

Dealing with pestering

It’s normal for children to ask parents to buy things. Peer pressure, adverts and marketing make them want things that perhaps they don’t need. However, it doesn’t mean you have to give them everything they want.

It takes time to change behaviour. If children are used to getting what they want, they may get upset when this changes. Don’t worry about reactions from others. With time, children can change how they react. These ideas can help your talk with your children and avoid or reduce pestering behaviour:

  • if you are going somewhere tricky like a toy shop, plan ahead. Explain beforehand what you are buying and why. Remind your children of what you’ve discussed
  • encourage children to save up for things they want. If they decide to spend money on something, it is their choice. If they later regret it, talk with them about what they can do differently next time
  • suggest that children put what they want on their birthday or holiday list. Often this helps children to feel heard and deals with the want, and they may even forget about it. When you get close to their birthday, if they don’t want the items anymore, they can make a new list. But it is a good way to show children how things they want change and are not always things they need
  • don’t just say no to children, explain why. If you are not happy with what they want, explain to them what you choose to spend your money on and why
  • saying we have money for what we need (such as food and heating) but not wants or treats right now helps them understand choices adults have to make about money.

Saying no and sticking to it, especially if you use it as an opportunity to talk to your children, helps them to learn self-control, to understand the difference between needs and wants, and to learn to save up for what they want.

Out and about

Use a visit to your local book or toy library as an opportunity to explain that not everything has to cost money. Talk about things that don’t cost money that you can enjoy, and plan free outings together.

Download ideas and activities for children age 3-11 in the Talk, Learn, Do guide.

The Talk, Learn, Do guide is also available in Welsh.

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