How to talk to three and four-year-olds about money

From around the age of five, children begin to build attitudes and habits around money. So the ages of three and four is a good time to start teaching them about money.

How does talking about money help?

Talking about money is the first step in building children’s financial skills and confidence.

Our research shows that adults who do better with money:

  • had conversations about money as children
  • were given money regularly, such as pocket money or payment for chores
  • had responsibility for spending and saving from an early age.

Did you know?

Our research shows that only four in ten children learnt about money at school.

Case study

“I have to admit, I was really cautious about teaching Jade about money when she was only four. I’ve always found money stressful and was worried about inflicting this on her. To my relief, Jade loves learning about money, especially when it involves playing a game or colouring in. The stress was mine, not hers. In fact, seeing her so carefree handling money has made money less scary for me!” - Casey

What three and four-year-olds understand about money?

By pre-school age, many children are beginning to understand the concept of money. They tend to be curious about the world and keen to learn. Which makes it a great time to introduce them to the idea of saving, spending and the value of money.

At this age, many children can:

  • recognise different coins by the numbers on them, their colour, size and shape
  • understand that things cost different amounts of money, like buying toys versus ice cream
  • understand that money needs to be kept safe, so they don’t lose it and can keep track of how much they have.

Out and about

Everyday activities, such as a trip to the supermarket, can be ideal ways to learn about money. For example, they can help with everything from writing a shopping list and comparing prices in the shop to helping to pay and checking the receipt.

It’s not too early to explain that sometimes we have money for what we need (such as food and heating) but not wants or treats. This will help them understand the choices adults have to make about spending.

Keeping money safe

Top tip

Giving a child a money box or piggy bank provides them with a safe place to keep, and save, their money.

It’s a good idea to make sure children have a safe place to keep money.

  • Talk about why it’s important to keep money safe and how you do it.
  • Introduce saving by talking about what your child could buy with their money as it starts to grow. Would they like to get that teddy bear or save for something more expensive?
  • Use counting to show how their money will add up if they save it.

The importance of counting

Money is all about numbers. So counting is a valuable skill to teach children when introducing them to the subject of finances.

  • Have a selection of 1p coins for them to count.
  • Ask them to count out different amounts at different times.
  • When they count correctly, reward them with 1p to put in their piggy bank.
  • When they’ve mastered counting 1p coins, move up to 2p coins and then 5p coins.

The power of play

At three and four years old, children learn through play. And what better way to learn about money than playing shop?

  • Share out some real 1p, 2p and 5p coins so they can get used to the feel, shape and size of money.
  • Add small price tags to things such as toys, treats or building blocks.
  • Set an easy budget for them to spend, such as 50p.
  • Help them work out what they can buy with that 50p.
  • Use counting to show that two 1p coins equals a 2p coin, five 1p coins equals a 5p coin, and so on.

Other games you can try:

  • Coin rubbing – put coins under a piece of paper and gently rub a coloured pencil over the paper until the coin pattern comes through. This is a great way for children to learn the value of different shaped coins.
  • Money hide and seek – hide money around the room for them to find and count at the end.

Children learn by watching

Three and four-year-olds learn a lot from watching others – including the television and you.

Watching television or films

Even watching television together is a great way to learn. Some good programmes to introduce children to counting include:

YouTube’s Five Currant Buns in a Baker’s Shop – a traditional nursery rhyme made visual:

CBeebies Numberblocks – where your child can sing along to learn numbers:

CBeebies Numberjacks – superhero numbers all with different characteristics and strengths:

Why not watch with them and find ways to talk about money. For example, when their favourite characters buy something, ask them some questions about it.

Watching and helping you shop

The weekly grocery shop is a great way to show children money management in action.

Show them how you plan your shopping, such as:

  • writing a list of groceries you need versus groceries you want but can’t have unless you can save some money while shopping
  • checking the cupboards for what you need before you go
  • making sure you have your cash or card safely in your purse/wallet
  • asking if they want to buy anything with the money in their piggy bank and working out if they have enough money.

As you walk around the shop:

  • If they ask for things that aren’t on the list, remind them they must stick to the list because that’s what you have money for today.
  • Ask them to help find items on the list.
  • Compare prices out loud with them.

At the till:

  • Ask your child to put things on the belt.
  • If you’re paying with cash, ask them to give the cashier the money.
  • If you’re paying by card, explain where the money comes from.
  • Explain about keeping money and bank cards safe.
  • Make sure they see you checking the receipt is right.

Developing willpower and learning to wait

Wanting is a big – and healthy – feeling in children.

You can use these ‘wants’ to teach them the skills of saving, negotiation and, no, sometimes they can’t have what they want.

Here are some tips:

  • Plan – if you’re going to a toy shop, plan ahead. Explain beforehand what you’re buying and why.
  • Listen – allow them to feel heard by giving them a list of things they can’t have now but might want for birthdays or holidays.
  • Explain – instead of just saying no; explain why. Explaining that we have money for what we need (such as food and heating) but not wants or treats helps them understand the choices adults must make about money.
  • Stick to your word – saying no and sticking to it helps them learn self-control, understand the difference between needs and wants, and to save for what they want.

Case study

“Before we go anywhere Henry might want something, we agree whether he can get something he sees or whether we are only able to get necessities. If he can buy something, we decide how much he can spend. There are some days he still tries to push for more, but I solved this with a ‘wish jar,’ where he keeps pictures of all the things he wants but hasn’t been able to get yet.” – Sue

More money-management activities

All children develop at different times. For example, some three and four-year-olds will respond better to some of the activities we recommend in our for How to talk to five and six-year-olds about money guide. Simply choose the ones you feel are the most suitable.

For more ideas for all age groups, download our Talk, Learn, Do guideopens in new window (also available in Welsh).

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