Aim high, dream big, try everything, be anything. Sort of the central message of modern parenting, right? Raising your kid to see the world as his oyster may be a good thing, it’s also important he knows the proverbial oyster costs money.  Is now (read: while neck deep in toddlerhood) the time to begin fostering little Johnny’s healthy relationship with cash? Among the sleep training, the potty training, and the pleading at the dinner table, should raising a financially literate toddler even be a priority? 

The answer to this is, well, yes. “Think about [financial literacy] like learning a language.  Children start the process of learning a language long before they ever speak or respond to a word,” explains Dr. Craig Bach, an educational researcher and member of the Educational Advisory Board at The Goddard School. “Learning these foundational skills helps prepare children for financial literacy later in their learning.” The basic skills you’re teaching your toddler, like persistence and delayed gratification, pave the way for financial literacy later on. So, it’s not added parental duty.  Early financial literacy skills are an added benefit of early learning. 

Financial Literacy: As Much About You As It Is The Numbers.
First up, we wanted a working definition of what exactly financial literacy means (you needed this part too, right?). Turns out, it incorporates much more than a calculator and spreadsheets.  In fact, Dr. Bach explains it might have more to do with your own behaviors and mentality as it is the math itself: 

  • Financial literacy is a set of skills, attitudes, and understandings that help people make informed decisions about their financial resources. 
  • Financial literacy helps people manage their money, spending, and investments to support their life goals. 
  • Financial literacy can also include an emotional component either directly or as a key factor in developing good behaviors that support financial well-being.  
  • Financial Literacy focuses on behaviors, actions, and decisions that lead to good results. 

How does this apply to a toddler, you ask?
Many of the skills that inform good decision making and emotional regulation are also building blocks of financial literacy. Fist bump for the multi-task.  Dr. Bach outlines some of these concepts: 

  • Math concepts. This starts with number sense, which can be as simple as pulling two blocks from a pile. For older toddlers, comparing group sizes and working with more- and less-than and categorizing by color or other attributes are great early financial literacy skills.  
  • Self-regulation. Being able to use strategies to calm and being able to listen to directions will help toddlers develop important behaviors for sound financial management later in life.
  • Persistence. Sort of important for everything, right? 
  • Executive function. EF allows people to plan, organize, and complete tasks. Well-developed EF skills help children suppress inappropriate behavior, avoid or work through distractions, keep multiple things in mind at the same time, move between activities and situation, and plan an action to achieve a goal.  
  • Delayed gratification. No cookie until after dinner, friends. 

Dr. Bach closes with an important reminder to parents: “Rewards and incentives play an important role in how children develop a sense of value, and how their efforts relate to value.”

Who’s ready to raise some financially literate kids? We are! 

ABOUT OUR EXPERT: Dr. Craig Bach is an experienced educational researcher who proudly serves as the vice president of education for The Goddard School. He also served as Drexel University’s vice provost for institutional research, assessment and effectiveness. The Goddard School, a leader in early childhood education, is celebrating its 30th anniversary in 2018.