Do you remember when you started reading to your children? If you are like me, this process likely began at a young age. I was very fortunate because my dad read to me right from the start. So that’s what I did. In fact, I’m fairly certain that reading to my kids from day one was one of the only things I felt initially qualified to do as a parent. The point I want to make, though, isn’t that I expected them to be able to read or even understand what it was I was reading to them. I just wanted to expose them to the highly valuable experience of reading. We now know about this thing called emergent literacy and that the building blocks for learning how to read and write start incredibly early. Heck, some folks even read to their kids in the womb. Or is that just an LA thing?

My perspective on teaching financial literacy for kids is much the same. The good folks at the Networks Research Institute first coined the term emergent financial literacy in the paper I cited in a recent blog post and it’s something that I’ve spent much of my life as a dad trying to help other dads, moms and kids with. You can check out my blog for lots more on this topic, but if there’s any one takeaway I hope you get from this post, it’s that you should start the money conversation with your little ones early – when they are in preschool. Of course, just as with reading, you expect them to start saving for college or shorting the housing market right off the bat. I’m sure you’ve noticed, though, that most kids are being trained in the art of consumption by the time they’re two. They need exposure to messages that aren’t just about spending. Advertisers are targeting our young kids and even if you try minimize media exposure, the messaging is almost unavoidable out there in the world (stores, schools, billboards, etc.). Therefore, we have to start talking to them about other choices that they can make with money, including sharing (or charitable giving), saving and spending SMART form a young age.

It’s remarkably easy to get this process started and, don’t worry, you don’t need Warren Buffet’s investing acumen to get these lessons across. In fact, I’ve identified what I think are the three uber important concepts below that from my blog post on the subject.

1. Needs vs. Wants – This is the mother of all financial literacy concepts. Kids must learn the difference between needs and wants because they are being taught consumption – actively and passively – from the age of two or three (even if you shield them from television). Activity – The next time you go to the store, play “needs vs. wants.”  When you pass by the Lucky Charms, ask your child “need or want.” And then move away as fast as possible to avoid the temptation yourself. Seriously, though, this simple game can make shopping a little more fun and help engage them – you can explain that breakfast is a need, but sugared cereal is really a want. Of course, if you’re game, have your child ask you to identify “need or want” in the next aisle.  Opening up this conversation will likely be very enlightening for both of you.

2. Delayed Gratification – Walter Mischel’s marshmallow study awakened people to the importance of delayed gratification. And Mischel has since found and promoted the idea that the strategies kids learned to delay gratification can actually be taught. I think you could hear the collective “phew” from parents worldwide. Activity – Have your child set a goal tomorrow. Paste a picture of the goal, the amount it will cost and how long it will take them to save – and start saving! If you haven’t yet setup an allowance, give them the weekly amount necessary to achieve the goal so they can see the money accumulate in the jar. Keep it simple – make it goal they can achieve in 2-3  weeks. Just that little bit of delayed gratification and goal achievement will be a valuable lesson. Then start an allowance.

3. Making Choices – Just as life is about the choices you make, so go money smarts. Getting kids used to the concept that choices always come with money is essential. If you haven’t started an allowance with your young one yet, give them a small amount of money the next time you’re in a store and give them the opportunity to make a buying choice. Sure, it sounds easy, but when presented with a store full of them, a choice can be harder to make than it looks.

Good luck getting the process started and please don’t hesitate to reach out to me via the link below any time.

John Lanza is the Chief Mammal and Creator of “The Money Mammals.” You can find out more about his books, DVD and financial literacy apps for kids at He’d love to hear from you.