Financial literacy is an important life skill to have, and learning how to be financially literate does not start in adulthood. Teaching children financial literacy should be a lifelong journey known by instilling values in everyday life. Find out how you can begin teaching financial literacy to children as young as toddlers.

Teaching financial literacy skills during the toddler years may come as a surprise, given how they can barely count! But financial literacy goes beyond balancing checkbooks and setting a budget – it begins with values. Here, I’ll share 4 financial literacy activities you can start doing with your kids as you go about your everyday life to instill these values at a young age.

Teach your toddler the difference between nice to have and need to have.

As an adult, I practice using this almost every day. With the ease of shopping online via Amazon, it’s so easy to add things to your cart but so hard to figure out what I need. Toddlers will not understand this concept immediately, but I model the difference when repeating their requests.

As an example, if your toddler is begging you for the bubble they saw at the store and says they need to have it, gently say something like, “I hear that you want the bubbles. It looks like it could be fun, but we don’t need it right now because we have that [insert something you know they cherish at home] at home. You can help me find the milk we do need in this aisle.”

If you anticipate a meltdown, try offering to take a picture of the item. Your child can look at it on your phone while you shop. Say you can’t buy it today, but if they still want it tomorrow, you can go back for it. This technique works for adults too! I usually try to sleep on it and see if I remember it the next day. Influencer marketing and savvy marketing techniques blur the lines between a need and a want. Sleeping on it will help give you time to process.

Understanding the difference between wants and needs takes time and experience. Explain to your toddler that stores intentionally place items within their eye level. You child may find it intriguing to walk down the aisle and look at all the eye-catching labels targeting kids. Have your child try to point out how companies design packaging to appeal to them. This exercise is a valuable learning experience they’ll take with them into adulthood. You know your child well; use your judgment whether they can handle all the enticing products at eye level.

Most importantly, avoid shopping when your child is cranky, tired, or hungry. No amount of logic will get you out of that situation.

Teach your toddler to value experiences over material things.

Teaching the value of experiences over materials is easier to teach when you consistently model this value in your family. Our family doesn’t get excited to go shopping – we usually shop out of necessity. We don’t feel like we have to keep up with the latest technology and widgets. My partner and I have authentic conversations in front of our children. We discuss trip planning or the newest iPhone release to model. This model how we talk through deciding when we spend our money.

For example, I had my iPhone for many years, and I was beginning to have many issues with it. I felt it was time to upgrade because I used something to its most entire useful life.

We DO get excited when we discover new experiences. It can be a new hiking trail, experience a new culture in a different country, or visiting zoos and museums. Memories of experiences last a lifetime. These are memories that make for great conversations to be had in the future when the kids are older. By valuing experiences more, you are raising happier adults.

Teach financial literacy skills to your toddler by appreciating the value of cleaning your own home, learning how to fix things, and cooking healthy food

Learning the value of cleaning your own home, how to fix things, and cooking healthy food are underrated life skills. You may find teenagers annoyed at their chores say they’re going to hire a housekeeper to clean when he’s an adult. Or he’ll eat at his favorite restaurants every day. When they have a job, great. But don’t let it stop you from teaching these values. These values will pay off when money becomes a challenge or they get laid off in adulthood. These skills will be areas within their budget they can cut down on. Instilling these values will give them confidence during challenging financial periods as adults.

Teach your toddler the concept of trade-offs.

The Dollar Tree is a great place to help your child understand trade-offs because everything is $1! My rule is that my child has to let me finish shopping without whining or asking for things. The reward is that he gets to choose one item of his choice when he lets me shop. There are times he couldn’t decide between 2 or 3 toys. We talk about the pros and cons of each, and he decides on which one he wants. This activity works well at Dollar Tree because everything is of the same value.

Your child will inevitably ask for something else even after you bought them something already. Explain that you spent the money on the previous item already. Now you don’t have any more money to spend. Consistency is key for young children to understand that money is finite.

Teaching financial literacy skills to children will take time, consistency, and patience. It might be easier to avoid taking your child to the store altogether. This can do more harm than good for children. Children need the opportunity and experience to practice self-control. They need you as their mentor to teach them the social-emotional skills needed to make good decisions.

What activities do you do to teach young children financial literacy skills? Let us know in the comments below!