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The Science of Parenting
Teaching Kids about Money in Childhood | S.11 Ep.4
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What does my preschooler even understand about money? What about my elementary-age child? Get these answers AND practical strategies to start talking with them about money concepts in today’s episode.
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This institution is an equal opportunity provider. For the full non-discrimination statement or accommodation inquiries, go to www.extension.iastate.edu/legal
Hey, Mackenzie Johnson here, coming to you with a special opportunity that the Science of Parenting team has going on right now. We are collecting feedback from you, our listeners and viewers, all about last season where we were talking about kids and food. We have a short 10 minute survey that we are going to ask about what you thought about last season, what you learned the last season. You have a chance to kind of give us your thoughts on the overall podcast, as well as even an opportunity to submit a topic for us to consider in the future. So your feedback is going to help us make decisions about our podcasts and future content. If you are over the age of 18, if you are a parent or caregiver of a child, and if you've listened to any of the episodes from last season, that's right, even just one of those episodes where we are talking about kids and food, you can find the survey link in today's episode description. Or you can also find it on our social media on Facebook or Twitter @scienceofparenting. Thanks for listening. We hope you'll participate and enjoy today's episode. Welcome to the Science of Parenting podcast where we connect you with research based information that fits your family. We'll talk about the realities of being a parent and how research can help guide our parenting decisions. I'm Mackenzie Johnson, parent of two littles with their own quirks. And I'm a parenting educator. Spender and saver, huh?
Suzanne Bartholomae:And I'm Suzanne Bartholomae. I'm an associate professor who strives to help people increase their Yeah, she likes to spend my money and save financial security. And I'm the parent of a high schooler, who's a pretty good spender and saver actually. her money.
Mackenzie Johnson:Oh, that's good thinking. That's resourceful is what that is. Yeah. Oh, well, today we get to start digging into these episodes on talking with kids about money at different ages. So I finally feel like I will have something to contribute here. Hello, my name is Mackenzie. Sometimes I know stuff just not very much this season about money.
Suzanne Bartholomae:Back in your wheelhouse.
Mackenzie Johnson:Yeah, right, back in my wheelhouse. So we're gonna be talking about some of these developmental stages, and how that plays out with how kids learn to understand money. And so in this episode, we're talking about how we talk about money, how we teach financial skills and knowledge and things like that, but we're gonna basically lump together all of childhood, like everything before teen years is in this episode. So you're gonna hear us kind of separate out between preschoolers and school-agers, right? So that's like three to five years old, versus like six to 12 years old. And there's a lot of overlap. There's some differences. You'll have to keep listening for those. But in order to have all these conversations, we are, we're gonna dig into these developmental stages. But one thing I feel like we haven't said, okay, episode four here this season, and we were having a great conversation with Barb right before this, our colleague, and she was just reminding us, so much of the stuff that you're talking about in these episodes is just parenting skills, right? But just thinking about it in the context of money. I was like, yeah, yeah it is, Barb. Look at that. She's talking about being warm in conversations about money. Having expectations of our children and helping teach them things about money, right? Like all these skills we have, and maybe we feel more competent in. I can say for myself, I feel more competent in my parenting and other areas. And then I think about money and I'm like, oh, I don't know. It sounds like, yes, I know these things. I know some stuff, like we can do this.
Suzanne Bartholomae:You so do and the more I talk to you, the more I'm convinced you're a role model for financial parenting. I mean, you're doing some really good, valuable lessons for your kids.
Mackenzie Johnson:Well, thanks. Yeah, so I've been in my wheelhouse all season. But we are, we're gonna keep thinking about our parenting skills that we've been talking about for 11 seasons, but we're thinking about it with newer content, with a different context. Right?
Suzanne Bartholomae:Yeah, sorry, yeah. So I think in an earlier episode, I said the importance of like these parenting for general skills that are transferable to all
Mackenzie Johnson:For sure, when we teach our kids about other domains, and that's certainly true of the financial anything, it can be helpful to have like appropriate warmth, domain that some of the things that Barb brought up about warmth and affection and connectedness and all those important aspects of parenting, they are relevant in the financial domain. right? That it's like coming from a loving place, and that we're also teaching them things they need for the world and have expectations of them and hold appropriate boundaries and that applies here. Great. Yeah. That means we have even more transferable skills than we were giving ourselves credit for.
Suzanne Bartholomae:Exactly. This isn't as big of a leap as some might feel that it was when they heard kids and money. Huh?
Mackenzie Johnson:Like, Oh, yeah. But we do have a new term, right, which love that. And so this idea of financial capability. So we've talked about financial socialization. We've talked about financial well-being, right. Financial Action, right, that was in episode two. We've talked about a lot of things, financial parenting. But this idea of capability specifically, and we're going to actually follow this term through all three episodes, like this episode, the one on teens, the one on young adults. And so this idea of financial capability. Tell us about that, Suzanne.
Suzanne Bartholomae:Okay, well, you know, the scholarship, and when it comes to any kind of science is that clarifying terms, and so that we're all as scholars talking about the same thing. And so the field started with financial literacy and that's still used quite a bit. But some would argue that, now that we have this new term financial capability, you can't confuse the two. And so financial literacy is a more narrow term, like knowledge and skills, versus financial capability is the capacity based on knowledge, skills, and access to manage resources effectively. So it's adding that access piece. So these three aspects of the definition are necessary for financial success. And we've talked about access, I think, in a previous episode about you can have the skills and the knowledge, but if you don't have the access to the products, the services, the resources, then you can't execute, you know, the goal or the decision that you want to.
Mackenzie Johnson:Yeah, well, even if we put it in a concrete example, like a loan. You might know about loans, you might know about interest, you might know the process even of how to get a loan, but if there's nowhere locally you can get a loan then there's not much capacity, right? There's not much capability to go actually do it. Exactly. And so capability adds the knowledge, skills, but it adds access, like it's part of it.
Suzanne Bartholomae:Yeah, yeah. And so for parents that are listening, when we talk about financial capability, I want you to think about a couple of concepts as we go through the different building blocks that we're going to talk about in a minute. So numbers is a foundational concept of financial capabilities. So children understanding more or less, right? Time is another concept. So the concept of saving, investing, and then thinking about the future. Money and income, another concept of financial capability, so bills and coins, earning money, sources of earning money, and there's more to these, but I'm just giving you a kind of a layout of some of the simple concepts. Choice is another one. Choice when there's limited, when there's limited resources, when there's scarcity and then markets and exchange. So this idea of prices, and that if I exchange, if I give you $1, I'll get back x. So those are kind of as parents what we should be thinking about, like, what are the concepts related to financial capability? Those are kind of the big ones.
Mackenzie Johnson:Yes. And so yeah, what are we actually going to talk with our kids about, those types of things, right, like those concepts that you were just getting into. And especially when we think about starting, you know, we'll talk about preschoolers and school agers like I said, but that's something that really stood out to me in some of the literature that you shared was, these building blocks, these three that we're going to talk about, they're really starting to build in preschool. It's not too soon. There's not so much literature around the earliest, from what I read, not that I know all of the literature around like infants and toddlers, that it really gets a little more like concrete that you can actually tap into the money skills or the financial skills or knowledge once they are kind of in that preschool age. And so I really am like, once they actually understand what numbers are. Right? Like this is one and it represents this many and this is two and it represents this many, right? Like if I'm holding my fingers up for that, they don't really have that skill until preschool which makes sense. That's kind of when some of these things start but choice even. Yeah, yeah, choice is a financial concept. Oh, of course it is.
Suzanne Bartholomae:Yeah, yeah, risk is another one. But you know, and we might visit that probably somewhere along the way.
Mackenzie Johnson:Yes. So okay, tell us about these three building blocks of financial capability. All kinds of concepts we teach, incorporate, but tell us about these three building blocks of financial capability.
Suzanne Bartholomae:Okay, and these building blocks are not new. We've talked about some of them already in previous episodes, but the first one is executive function. So executive function are those behaviors supportive of financial well-being and they're personal attributes that relate to, I guess, a suite of mental operations, so it involves like self-control, planning, focus. So if we build a strong executive function in our child, if we help them develop that, then they can plan easier. They can focus their attention, remember details, and then juggle multiple tasks. So, and that will hopefully lead to healthier or should lead to healthier financial outcomes.
Mackenzie Johnson:Yes. Okay. So as I think about these three building blocks of financial capability and executive function, I'm like, okay, like creating a budget, that would be executive function, right? That planning, but also like living within the budget you actually set, right? Like if we carry it out, that's an executive function, that ability to control impulse, and which I shared before, this is an area I maybe have for growth. I'm not going to self-depreciate so much that I'm like, I'm doing bad. No, this is an area where I could maybe do some growth. And it's a thing that I have some of, right? I have some executive function, and I have some areas for growth, as will many of our kids. Right?
Suzanne Bartholomae:Oh, yeah. I think you're underselling your skills again, Mackenzie.
Mackenzie Johnson:I find it hard to positive self talk.
Suzanne Bartholomae:I know that you keep lists. I know that you're organized. That means you're a planner. I know that you can focus your attention, keep an eye out for detail, you know, and juggle multiple tasks as a parent.
Mackenzie Johnson:That's true. I do that. Okay. Executive function is one.
Suzanne Bartholomae:So executive function is one, and then financial habits and norms. So these are values. And we talked about values, standards, routine practices, around money. So these are the habits and norms that help people just kind of get through their day to day financial lives. Okay. So yes, like norms of saving, paying bills, earning income, these are all kind of the basis of a habit.
Mackenzie Johnson:Yes. Well, that makes sense, right? Yeah. Yeah, I will say a habit is basically things you do regularly. But the habit has the beauty of, it hopefully doesn't require a lot of thought, right? That's the thing about a habit, you just kind of do it. But so thinking about that for our kids and money in the future, like, yes, we pay bills on time. We purchase the things that we need for our family. Those kinds of things, okay, they understand you have financial habits and norms that are like you understand them and they're positive habits.
Suzanne Bartholomae:Right. So your child might see, okay, when the mail comes in and it's a bill, if you do get paper bills still, you know, you do get some for like the utilities possibly, or who knows, waste management? I just got one. So do you take that bill and you throw it in a pile, like that's a habit, right? Versus I opened it up immediately, and I sit down at the computer and I make an electronic payment, or I sit down and write a check or whatever form you use. But that's a habit, right? And the norm is that we pay, we're going to pay that on time.
Mackenzie Johnson:Okay, I have a thought, but I want to hold it. I'm gonna hold this in my head until you talk about the third building block. So, this third one is financial knowledge and decision making skills.
Suzanne Bartholomae:Sure. So these skills and knowledge are exhibited by actions like financial planning, research. We talked about research and being able to find reliable information, use it, process it, and then intentional decisions. Okay. And so yeah, these are, again, our know-how is really more important than that factual base knowledge. It's the know-how, the skills, the process. And with the decision making skills, I think we had in a previous conversation that we did talk about procrastination, choice overload, and how we struggle as adults. And so parents are listening, you know, keep in mind that our youngsters that we're teaching, their decision making, they have no practice making decisions. So we need patience, so we need to give them time. Yeah, that's hard. And realize that they're going to be deciding at different rates than we are.
Mackenzie Johnson:Yeah, we have a lot of practice of like, whether I should buy this or that. I can make that choice pretty quickly because I make that choice all the time. A child who is spending their allowance or who is using money they got for a gift, they don't have a lot of experience making those kinds of decisions.
Suzanne Bartholomae:And yeah, that's a tougher choice because they have very, you know, they don't see necessarily that there's more income coming in or more earnings coming in. You know, maybe it was a one time job babysitting for somebody or mowing a lawn and you know, they're just filling in for somebody, let's put it that way. And so we're ideally, you know, we know that there's another paycheck, if we're fortunate to have a steady job.
Mackenzie Johnson:Oh, interesting. Okay, so these three building blocks of financial capability include executive functioning, right, these cognitive skills in our brain, financial habits and norms, that we have those, hopefully they're positive, and then our knowledge, our know-how, decsion making skills. Okay, so the thing that just was like clicking. I was like, oh my gosh, aha, aha, in my brain as we were walking through this. So obviously, parenting education, I care a lot about parents and helping them learning the things they want to know and trustworthy information. And sometimes people say things to me when they know that parenting is my research interest of like, you know, parenting has been going on forever, honestly, nothing really changes, right, from generation to generation. And I tend to believe very differently than that. I think there are a lot of things that change in society and culture and there's a lot of things. And very specific to this topic, you talking about paperless bills. That is a huge change as we think about financial parenting. You know, I can picture my mom sitting down with bills and her 79 cent notebook, right? I can picture those processes as things I could observe when I was a kid, that my kids will not observe us doing because we don't do paper bills.
Suzanne Bartholomae:That's a double whammy. Yes.
Mackenzie Johnson:I didn't think about how that small change changes how we parent, right. But even the implicit, right, the modeling that happens, our kids won't see that unless we go out of our way to make sure they see that. And I just believe there's a lot of things that change from parenting generation to generation, but that one thinking about it in the context of like, financial parenting, that is different. There's a different set of opportunities and challenges when you're parenting our kids in this day and age to teach them about this stuff.
Suzanne Bartholomae:Yeah, the modeling isn't happening weekly or monthly, because you set up your bill pay once and then and then you might monitor it on your laptop and kids are not engaged as part of that process. So you're absolutely right. That's when I say double whammy. It's like, well, you know, we are modeling. If we're implicit parents, you know, financial parents, then we hope they're picking up on it. But if it's not actually visible, then yes.
Mackenzie Johnson:That visibility piece of it. The visibility of it of like, this is a physical thing that comes in the mail that I have to open, that I might set on the counter, that my kids will see me right, opening and talking about it, or like prompting a conversation between me and my co-parent or my partner about this bill and how it might be more than I expected or that happened. Like that process looks different in a more paperless world.
Suzanne Bartholomae:Oh yeah, even the discussions between partners. I mean, I know like, we have text alerts that come in on credit card charges, you know, which my husband gets, my daughter gets it too, because she has a card on it. And you know, if there's a foul charge, or like a question about a charge, I get a text, you know, from my husband like, hey, were you supposed to get charged twice, you know. And so my daughter doesn't see that text to me. Right. So again, that conversation is absent, where it might have been there before. Yeah. I like that you're picking up on that.
Mackenzie Johnson:I'm like my brain, my mind.
Suzanne Bartholomae:That was a good one.
Mackenzie Johnson:Oh, yeah. Okay, so anyway, we're talking about financial capability. But you know, as we think about this, the whole point of this episode, well, kind of the season, like how to teach your kids about money? How do we talk about it? And it's like, okay, it might look different for us than it looked for our parents because of some of these technology pieces and culture, etc, etc. So let's dig into this idea of where, we love talking about development. And don't forget, we have a whole podcast season, season five, where we have an episode for each age group. So we actually have a separate episode, one for school agers, one for preschoolers, that you can go back and listen to those to learn all about where your child's at developmentally, kind of across the domains. But for today, thinking about money and finances, let's talk about the milestones. Where our kids at? And so let's start with these preschoolers. We define it for our purposes today by three to five year olds. What are some of the financial milestones like the learning and cognition, like what's happening with preschoolers and money?
Suzanne Bartholomae:Well, they're not going to be developing really sophisticated knowledge at this age, that they're continually developing, and they're building on what they learn as they develop. Right? Which we know. So it's continual, but in terms of finances, just learning the concept of money is a big one, right? So really, like being able to delay gratification, maybe not so much developing but it's maybe starting to emerge. That's really more starting a little bit later, but consequences, being able to demonstrate self-regulation and persistence. That's something that you can see in three to five year olds, right? A little bit, like the whole marshmallow experiment.
Mackenzie Johnson:Right, if we give them one, can they wait? Like, I'll give you two marshmallows if you don't eat this, but then I'm gonna leave you unattended to see if you eat it.
Suzanne Bartholomae:See? Yeah, we did. Exactly, exactly. So I think that's a good example of like, oh can they resist the temptation? And then the consequences, right, that they get a second or third marshmallow, right, if they can, or the second marshmallow rather. Yeah. So it's the idea of kids having possessions. So things that are mine, right? So in preschools, I think, setting up routines and strategies for kids to share, right? So the idea of sharing, borrowing. If you borrow something, you have to return it. So right. If you borrow a toy from the shelf, you have to return it. If you borrow a book, you need to return it. Yeah.
Mackenzie Johnson:So yeah, just like a very simplified version of as adults, what we know as complex, or what feels like complex terms. They're getting the really simplified version of that in preschool.
Suzanne Bartholomae:Yeah, so counting, right? Being able to recognize what a penny is.
Mackenzie Johnson:That actually, that came up in my house this weekend. My daughter shared coins, she got change when she purchased something. She gave my son, it was nine cents. That was a big deal. It was nine cents. And he was upset because he only wanted the brown ones. That right, that ability to compare and contrast is a preschool age skill. Like he knew these are different. I liked these ones better. He hadn't associated the monetary value with it. Right. But like, the brown ones, I want the brown ones for me, and so there's these really simple versions of skills that come into play in preschool.
Suzanne Bartholomae:Yeah, that's a great example. Yeah. Great example. So as he develops a little bit, he's going to realize that a penny is worth one and then a nickel is worth five, right? And then maybe understand the equivalence between them that if I have five of these brown ones, they equal the the silver one, the big one, the big one. Yeah, not the really big one, the sort of big one.
Mackenzie Johnson:Yes, well, and I just feel like so many of those little cognitive things are just building this foundation, right? Like, we need to be able to count to understand investing, right? You need to be able to understand just those really simple compare and contrast for comparison shopping, right? Like a lot of these adult skills that we hope our kids get to to be financially capable, that foundation being laid. But it was also interesting, there's this chart from this report on the Consumer Finance Protection Bureau, my new favorite, in this chart, they had laid it out by age and across these three building blocks. And so they in their chart, they had a big green checkmark on preschoolers and executive function. Like, this is the main area your children will do growth in this stage. So like, okay, that's good to know. I can lean into teaching about executive function like you're talking about. Yeah, it's action and stuff like that.
Suzanne Bartholomae:Yeah. And hopefully, we'll post that as a resource for parents since we're really lumping the two age groups together so that they can kind of get a deeper dive into those but yeah.
Mackenzie Johnson:So lots of good stuff around preschoolers. What about our school-agers? So like, we're calling this our six- to 12-year olds here. Tell us about those kiddos and their money milestones.
Suzanne Bartholomae:Okay, I've got to tell you about money milestones. But before I leave preschoolers, and this applies to both age groups, and we talked about this, is this idea of that they're exerting their independence. And so money represents some control that they have over their lives and that's kind of what kids are looking for. Right? They want to be able to make their own decisions. They don't want to be told what to do all the time over everything from what time to go to bed to how I spend my money or right? So this idea of autonomy and control is something I think that's worth mentioning to parents about those age groups.
Mackenzie Johnson:Yes, and what independence and autonomy looks like for preschooler might be like, I have money, right? Like this is mine. Right? We were talking about that's the concept for preschool like this belongs to me. And what independence might look like in the age group we're moving into might look more like, this is mine. I can choose what to do with it. Right like the power it can give me to do things. Great point about autonomy.
Suzanne Bartholomae:I'm sorry to derail us. But yeah, I wanted to mention that before I forgot about it.
Mackenzie Johnson:A good segue.
Suzanne Bartholomae:Middle school years, where preschoolers maybe aren't forming financial habits and norms, middle childhood, they can start getting positive money attitudes like understanding the value of saving, planning, what happens like consequences, the way they spend like making a spending plan. So you can talk with them about why when how people spend money. This idea of being able to see a little bit into the future is emerging, right, and goal setting. So, yeah, those are some basic concepts of understanding spending, planning, saving.
Mackenzie Johnson:Well, and I remember, go ahead.
Suzanne Bartholomae:I was just going to say math and math skills are always all financial decisions involve risk and math skills numeracy.
Mackenzie Johnson:Yes, the math is a huge part of it. Well, even like for school-agers, right, that's like addition, subtraction, multiplication, all that stuff. That stuff but like elementary school. So that's a huge part of it. I think back to when we did our podcast episode on school-agers, the word that just sticks in my brain for this age group is mastery. Right? Like, in preschoolers, you kind of have preschoolers learning how the world works, right? There's a lot of why, there's a lot of like, hmm? Questions, really. But in school-agers, they've kind of moved into, now I understand how the world works. Now I want to try it out, like now I want to get good at stuff. Now I want to, right, and so this idea of mastery of like, I'm trying something to accomplish it or to make progress. And that's kind of what I hear in some of these skills, too, is building habits, getting to use money for things that I want, and things like that, that idea of mastery feels like it ties in.
Suzanne Bartholomae:Oh, it does. Yeah, I think so. That's a really good, good point. And if we can encourage that through, you know, maybe an allowance, maybe encouraging if they get the offer to make a little extra money in the neighborhood that we let them do that. And this might be, that would be an
Mackenzie Johnson:Absolutely. Well, until the green check of opportunity. the three financial, the three building blocks of financial capability. And preschoolers, it was executive function that they were like, that's their big green checkmark. But in school age, it's really this idea of financial habits and norms. And I even think of my nephew, like, as a kid, I swear that kid had more money than I did when he was a child, because he was a saver, right? And I started to see his habits and norms of that's who he's going to be with money, right? He has kind of this personality and attitude related to money came out in this school age. And I think my daughter, like my daughter is learning about money, excited about money, interested in it. And she's in the school age, like early school age group, and I am, I'm starting to see her habits, like the things she likes and some of her norms. So that's really building and getting established here, right?
Suzanne Bartholomae:Oh, yeah, definitely. It sure is. So yeah, their attitudes are being formed and their ability to plan and spend, but then there's a whole set of concepts that they're related to, they're related to the habits and the norms. So this financial knowledge is just understanding the basic concept of my parents work for money, they earn money. And with preschoolers, and I think middle childhood, you can discuss the concepts of needs and wants. Goal setting is a big area, right? So those short and long term goals, at least for the middle childhood years, are things that you can work on with your child as well so they can save for goals. That habit, right, and saving for goals. So their financial habits and norms are related to the skills and and the knowledge that we have.
Mackenzie Johnson:And I think that it's nice to hear you highlight these concepts like yes, these are the types of things I can be talking about, right? These are the topics. If I'm thinking about talking with my kid about money for school age, those are some of the topics to touch on. That's really great.
Suzanne Bartholomae:Yeah, yeah, and goods and services, that whole idea of exchange. I give money at the store, my credit card, my apple wallet, whatever I'm using, you know, maybe highlight that this is a form of currency. I do have to pay for this later. You know, you may not see dollars and cents like what you get for a holiday gift, although kids are getting Amazon gift cards and other plastic, which is a much more abstract concept than the bills and the coins. Again, that generational change.
Mackenzie Johnson:Yes. Oh, interesting. And that prompts me to think about I recently had a conversation about banks, basically, with my school-ager of, we were riding in the car, had a question about how we, it's because I forgot my money. I forgot to bring, went to the grocery store with my child and forgot to bring a form of payment. And so then I was talking, well, yep, we had to leave our food behind and I had to come back, right? They took my cart over to the side. And so I had to run home and get my card and then come back and she was in the car with me and she was asking about it. She goes well, you don't even give them money anyway. Because she was like, she didn't understand that I was putting a card in, and that that was my form of payment. And so we did, we talked about like, basically the store tells them that Mackenzie bought this much. Mackenzie spent this many dollars, she chose stuff for this many dollars. And then the store tells my bank to take that money from the money I gave the bank, and then the store has it. I was like, this is very abstract to tell a six year old.
Suzanne Bartholomae:Yeah, but they can start to grasp the concept, I think, you know.
Mackenzie Johnson:And so important when, I mean for our family, we're like a pretty cashless family. And so it's important again, if it's not visible. I feel like that is my whole takeaway from this episode is finding ways to make it visible to my kids. That's like, what I'm gonna keep thinking about.
Suzanne Bartholomae:Well, you might have to get a cash withdrawal from your bank account. Yeah, have a week, or you know, just have a week of learning, you know, hey, we're gonna be a cash family this week so they can learn some concepts.
Mackenzie Johnson:Yes, making it visible. I love that. So we have a lot of, I mean, we've talked about so much good stuff here already, what kids are learning and working on in these age groups. But we want to dig into some strategy, right? One of which we've talked about every week, which is modeling, right? Whether we mean to or not, that's a form of educating our kids, particularly our preschoolers and our school-agers who are soaking up everything. But there's also an idea of experiential learning, which is about creating experiences. And then a third version of teaching being instruction, like we're explicitly teaching you something. So I'll touch on modeling, and then I'm going to pass the baton to you to teach us a little about experiential learning. So modeling, of course, thinking about the choices we make, the behaviors our kids observe, whether that is paying bills, if again, if it's visible. You know, choosing our clothing, right, the clothing that our family has, how we go about making that choice? Do we comparison shop? All of those things that our kids are observing about us. And as Barb reminded us, which I don't know why I'm always like, oh, Barb, good reminder. Whenever she says something, I'm like, oh, of course, I need to think of that. We're their first teachers, as parents we're their first teachers. And she said it this way, and I loved this phrase and actually have it word for word, home is the first place that kids see how money is valued, saved, or spent over time.
Suzanne Bartholomae:And that is powerful, isn't it?
Mackenzie Johnson:Right, like our home is the first place that kids are going to get this. And so finding those ways we are modeling and giving attention to it. So that's one of the strategies related to financial capability. But there are these two, right? We're like, how do you talk and teach about it? Here are two, one is this idea of experiential learning, right?
Suzanne Bartholomae:Yeah. So for preschoolers, they learn by doing, right. And they, you know, they learn from your tone, the words you use, maybe your facial expressions, about how you might feel like if you're interacting with money, right? So you're giving them a lesson just that way. But as we get older, so as we get older, with school-aged kids, you know, we can be more purposeful in our discussions. Not that you can't be with preschoolers, but there might be a greater depth of understanding. Let's put it that way. Yeah, so with the experiential learning, there's so many opportunities in our home, you know, with preschoolers, and I say this too, how many parents have a grocery store set up either in their basement or in the garage?
Mackenzie Johnson:Oh, like a dramatic play, pretend play kind of setup that their kids are playing restaurant or store? Absolutely. Exactly.
Suzanne Bartholomae:They love that, don't they? So they wait on tables, and then they bring you food, and then they give you a check. And then you give them some form of payment, you know, like, especially with restaurants.
Mackenzie Johnson:Even the fake slice of cheese is payment.
Suzanne Bartholomae:That block of wood that represents a piece of cheesecake or something that you're like, yeah, okay. Yeah. Something, something that visually represents? So those types of opportunities, and this is for the middle years, I mean, both of them really, in terms of just engaging in, if you go on a shopping trip together, maybe give them a small amount of money. Have them make a choice Yeah, yeah. And then they divide it up and you're like, wow, all about something to buy at the store, and they can hand it to the cashier. They get the choice, then you can reflect on the choice. Were you happy with your choice? You know, would you do it differently? Were you happy? Were you unhappy? Yes, of our carrots go towards, that much goes towards housing and you know, but the idea of just giving them money whenever they ask for it or want something and that's something I know parents probably can really relate to is that nagging. It's almost sometimes you want to just leave your child at home rather than food. And so, you know, that's just kind of minor ways that we go shopping with them because it's like, I'm going to spend so much more money if I take them with me because they're gonna nag me for this stuff that the marketers want them to buy. And so that's, you know, one thing that you do have to kind of have can bring them in. But I know kindergarteners and school-aged a ready response for like, this is our list. This is what we shop from and we don't deviate from the list. I think that's an example that you've used before, Mackenzie, and yeah, that maybe sharing experiential learning. You know, you could share your kids understanding wants and needs. You know, I held on to major household budgets with your, I would say with your school aged children. So, you know, we spend our money on housing and transportation and clothing and food. And you could give them M&Ms and say, we spend half of our M&Ms. Okay, maybe we the piece of the kindergarten, my kindergartener's little don't use candy because of the health. drawing of like, oh, air is a need, love is a need. And then she put iPod is a want so she got it right. Yeah. They are understanding that. Yeah.
Mackenzie Johnson:And I think of the experiential learning with preschoolers. I love the idea of pretend play. Preschoolers are so into pretend play so they can try out those roles, they can try out those processes. Love that as an idea, because it's really just, experiential learning is just about creating opportunities where they can try it out. Right. And so I mean, I even think of, you know, so often I say, try it out with low consequence. Right. And so learning a hard lesson about money. You know, you've talked before about the school of hard knocks, that's what people learned about money, I made mistakes, and then like, literally paid for it. But that's what experiential learning is. And when we can do this with our kids, create opportunities for them to try it out and experience whatever that is, while the consequences are fairly low. Okay, actually, I have a story. I think I teased it. You asked me a question in a previous episode and I was like, wait, I don't want to tell you yet. I want to tell it later. I had an experience recently with my daughter who is school age. She brought money to the store. She had $2 and she wanted to buy something. She comes up to pay. It's $1.99. She brings it up. And it's $2.13 because there's tax. And I had mentioned to her when she was choosing an item that you know, okay, it's actually the price tag is not actually how much you pay. There's tax. And so I had explained a little bit about that and she wanted to try it. And so we went up to the counter with the thing she wanted to purchase and she rang it up. And sure enough, right, it's too much. And she looked at me and she goes, you don't have any coins you can give me? And I was like heartbroken inside. I was like, I just want to fix this discomfort for you. You're so sad. I mean, that was what my heart said, but I was like, this is an important moment for her. Right. She's learning about spending her own money. She's learning about needs and wants. And making, right, like this decision making process. And yeah, and the knowledge of sales tax exists. And so I actually, I literally didn't have coins. I did have my card that time to pay for my groceries. But she had to put it back. She had to choose something else because she didn't have enough money. And at first she was really disappointed about it. And she ended up finding something that was cheaper and so she could get two of them instead of one bigger thing. But it was actually a really great opportunity for us. She had the experience of the disappointment and the decision making process. But it also sparked some really great conversations around what is sales tax. We talked about how it helps pay for schools and roads and parks. You love to go to the park. Tax is part of what pays for them and that we all share, like everybody who goes to the store pays that sales tax and that everybody contributes. But that experience is really what I'm trying to get at the heart of. She got to try that out. I'm trying to create those opportunities.
Suzanne Bartholomae:I'm sorry, I have to interrupt. I mean, you're having a tax conversation with your child and you're saying you're not a strong financial parent. I mean, by the end of this season, we're gonna have you in a really good place in terms of how you feel.
Mackenzie Johnson:I'm gonna feel so confident. I'm gonna know. But yeah, by the end of the season, you'll finally convince me.
Suzanne Bartholomae:Oh, yeah. Oh, definitely.
Mackenzie Johnson:So yeah, and that was almost like two parts to the story, right? But the experiential learning, she got to try it out. So other ways we curate these opportunities is like, how they use their money from the tooth fairy or a gift, money they get for a gift or even having a lemonade stand. That's experiential learning with money for our childhood, like our kids in childhood. But then the second piece of actually teaching about taxes, that was more on the explicit instruction, right? Like I'm actively teaching you a concept or a skill. And so for preschoolers, I even think of my tip for talking with preschoolers about money, or honestly, teaching preschoolers anything, make it about their immediate concrete experience, like what is in front of you. And so one example I think of is like price tags. Teaching my son, who's a preschooler, this little sign here has numbers, what number is this? Okay, that's how many dollars it costs. If we want to bring that, if we want to have that thing, we are saying we will pay that many dollars. But again, trying to find ways to make it concrete to their experience. And so one of those strategies for explicitly teaching money concepts to preschoolers is books. Yeah, books are a great way to make something in their current concrete experience. So explicit instruction for preschoolers, books and then finding ways to make it concrete. What about some strategies for explicitly teaching our school-agers?
Suzanne Bartholomae:Well, talking to them about how income comes into your house, right? So they can understand jobs, and that there are different types of jobs that we can have to make money. And you know, just a conversation, whether it's from a book where we're reading about firefighters or construction workers, or whatever it might be. You know, there's some books that have all the different types of occupations, having a discussion about what they want to be. And then how there's a different set of skills that are required for all the different types of jobs. So how does income come into our house would be one discussion for explicit instruction. Taking them to work with you or your partner, or if you have a grandparent, you know, that could show them the workplace. And give them exposure that way, and then talk about this is how I spend my time and I have to work this many hours. So just teaching them the idea of earning income, right. And, you know, explicit instruction could be if you encourage them to take a job in the neighborhood, right? They make their own earnings, and so that I have the power of earning money, and yes, and the choices and talking to them about that. And what are we going to do with it? Where are we going to put it? Like in a bank? Are we gonna put out a piggy bank? Yeah, so how we're storing money through earnings that we make, you know, in the neighborhood.
Mackenzie Johnson:That was twofold, right? They get the experience of earning the money and having the money. So that's experiential learning. But it's also explicit, because we're talking about the concepts that go into it. Right? Yeah. Yeah, they often go hand in hand, and typically, somewhere in there some modeling strategies there.
Suzanne Bartholomae:Yeah, yeah, exactly. And if they do make some earnings, having that discussion about what's the goal, what do you think is a reasonable goal for this money? And what's, you know, how do you want to spend it? And what happens if you're not happy with what you purchase? So all of a sudden, teaching them some consumer skills. I think I mentioned this in a previous episode, you know, I bought something and it was, you know, my daughter bought something and she wasn't happy with the quality of it, or it was defective. But there's been a couple of occasions. And so all of a sudden, now that she's older than school age, it's an opportunity to talk about those consumer skills, as well.
Mackenzie Johnson:And even I think of taking my child to the customer service desk with me. Yeah. Listening to how I have those conversations and talking with them. I was bringing this back because of blank. Right? And hopefully modeling positive interpersonal communication skills there. But yeah, I'm getting to teach those things.
Suzanne Bartholomae:Sure. And, you know, maybe you have them cut coupons for you, you know, and then you have a discussion very explicitly, like, okay, this is what we buy every week in our household, Here's a coupon for it. And I'm gonna actually, instead of it being$1, it's gonna be 80 cents because of this piece of paper or because it's not visible, it's on your app, right, on your grocery store app if you use one and you can show it to them.
Mackenzie Johnson:Oh, yeah. Oh, that's awesome.
Suzanne Bartholomae:There's so many opportunities. Yeah, the issue is that they take time. And have I mentioned this, you know, already earlier in this podcast that you know, parents, we want to just get it done. And we don't want to take the time for those lessons. And we're not blaming parents. I'm guilty of it. But it'll pay off.
Mackenzie Johnson:It is, it's more work. It is more work than just, right? I can go to the store by myself and just zip around. I mean, I've literally worn my headphones to the grocery store by myself, right? This luxurious experience, like I'm all alone, quit bothering me, getting the stuff I need, and I'm listening to a podcast or music I like. That is less work than bringing my child with me and managing their behavior and teaching these concepts and giving them opportunities to try stuff out or look at price tags. That takes more energy and attention and we don't always have it. And that's okay to not always have it. In a previous episode, we can show up imperfectly. Right, we're gonna show up imperfectly and still try it.
Suzanne Bartholomae:Right. And it's an ongoing process.
Mackenzie Johnson:Yes. Yeah.
Suzanne Bartholomae:We're still learning. You're still learning. I'm still learning. You know, it's not done. It's never done.
Mackenzie Johnson:We're always just trying it out. We're really just trying it out. Okay, so we've walked through these three building blocks of financial capability. And we've got lots of great strategies for our preschoolers and the our school age kiddos. And now this brings us to another Stop. Breathe. Talk. space, where our producer is going to ask us an off the cuff question. I don't know what she's got for us talking all about kids today. A little too energized and intrigued to ask us something hard.
Mackenzie DeJong:Do I have a tell?
Mackenzie Johnson:Your facial expression gives me hints. I don't know.
Mackenzie DeJong:Woah, boy.
Suzanne Bartholomae:It was her eyebrows. The way she raised them.
Mackenzie DeJong:Um, yeah. So. And this is a question that Mackenzie has heard in previous previous seasons. Okay. But we're focused on this topic, right, we're talking about kids and money. And, of course, Barb helped me come up with it, too. But let's imagine we're at the point where our kid is say, honestly, could be any age, but say, since we're talking to middle childhood, say they're like a fourth or fifth grader. And we realize, we have not talked about money. Like, we go to the store. We buy things and I swipe my card, like you were talking about. When they have activities, I just go ahead and, you know, write a check or send the money with them, but don't really talk about it. And I've hit this point where I've listened to this podcast and go, wait a minute, I haven't done any of that. So the question is, if we don't model those things, or we haven't talked about what we're doing with our money, how can we, and Mackenzie you're gonna know the word I'm gonna use, how can we recover? How can we catch up? Is it too late to have those conversations but if we're talking to our fourth, or fifth grader, how can we recover?
Mackenzie Johnson:I have an answer. But I don't have to go first.
Suzanne Bartholomae:Well, I mean, I would dare say that you think that you haven't taught them anything, right? You're saying, you know, the assumption is what you're coming with this question is like, I'm at the stage, my child is in fourth or fifth grade and we haven't had any discussions. Well, I would argue that I bet I could go back through the last 10 years of your child's life and pinpoint many lessons that you gave your child that you were not aware of and that may not have felt explicitly like financial lessons. But you really have engaged in in much more than you know, and I think that Mackenzie, the other Mackenzie, has been definitely a testimonial to that, that the more we talk about it, the more there's emerging from it because she's putting a magnifying glass on her behavior because of this episode or this season, not this episode. But because of this season, she's uncovering all sorts of financial parenting that she's doing that she's like, wow, okay, man, okay, I'm doing a lot more than I thought. And so to get started, I mean, but if you want to be more explicit and purposeful, I would argue there are opportunities for that. And so I mean, just some of the concepts that we've talked about that you could just start bringing your child into decisions you're making. You can have a family meeting where you start maybe talking about, hey, we have a little bit of extra, you know, we have $200 extra this year, you know, or this month or this quarter. What do we want to do with it as a family? And where did this money come from? Why do I have extra money? So, you know, because of maybe cutting out an expense or whatever it might be? So yeah, I would argue that it's definitely never too late to start. And you just have to be more purposeful about it. And yeah, and having that conversation and ask them what questions do they have? Oh, start with like, you know, we haven't really talked that much about money. You see me doing stuff. You see me online shopping. We go to the grocery store together, but we never really talk about money. Do you have any questions about, you know, anything to do with money? Yeah. And if I'm comfortable answering it, I will. If I'm not, I'll tell you why I'm not.
Mackenzie DeJong:Oh, let's find the answer. Yeah, yeah. Yeah.
Mackenzie Johnson:And I think that's also establishing this kind of open communication we hope our kids have with us later related to money and related to other things. It's like, yeah, you can ask. Yeah. Also, one thing, you know, I'm big on repair and recover, and, you know, so I do think saying to your child, I think it's okay to have that conversation with your child of, I've kind of left you out of this. You know, maybe it would have been good if I had been teaching you more stuff. Like, let's get started. You know, let's explore some of this. And so I think it's okay to have that conversation and tell them from here on out, I'd like to do this more. It's okay to just draw your attention, like, I could have done this better. And so I think that's all right to own that. And then one of the things I think of I'm like, choose whichever of those three strategies we just talked about of modeling, or experiential learning, or explicit teaching. Choose one that you feel like maybe if you feel like, you're brand new to it, choose whatever feels most achievable to you. Like, okay, having these conversations intimidates me, but I could help them with a lemonade stand, right? Going all the way from zero to lemonade stand feels like a big leap. But I can work on making what I'm doing with money more visible to my child, right? Choose whatever one you feel like you have the most natural strengths and personality for, and lean into it. Right? You don't have to go, we're showing up imperfectly. We don't have to go from zero to our child is now a financial wizard, you know. So show up in a small increment that you feel is achievable to you. And then build from there is really where I'd say. It's not too late to start.
Mackenzie DeJong:Okay, so I'm also going to answer my own question just briefly, because I thought of something as you were talking. Fourth and fifth grade is about the time that you also might be starting 4-H, and that would also be a good time to say, oh, you know, we didn't talk about this. But this project requires us to talk about how much we spent on the fabric that we bought. And yes, the consumer management side of it. So that's a shout out to Barb of the 4-H side of things. Yes.
Mackenzie Johnson:Yeah, a great opportunity. It's almost like that's intentional that 4-H starts at this developmental stage where they're learning to do all these things. That's great.
Suzanne Bartholomae:Yeah, that's a good way to answer your own question. And I was gonna bring up the same point about the interaction. You may feel like as a parent, oh, I haven't gotten started with my child, but they've gotten started. So I think asking them about what they know about money, how they're interacting with money. So whether it's 4-H, Girl Scouts, Boy Scouts, school fundraisers, coming home and asking for money for a field trip, paying a library fine. I mean, we interact with the economy all the time, you know, whether or not we have a wallet in our pocket or not. And whether or not we're spending and so that might be a good conversation opener, too. What do you know about money? Where have you learned about it? What is the school teaching you? Because the mandate in Iowa now is that there has to be some instruction around financial literacy and the first graduates were in 2021-2022. Yeah, so they are learning about money, even if you fall down on the job as a parent.
Mackenzie DeJong:Really, you haven't. You've probably been talking about it.
Suzanne Bartholomae:You have not.
Mackenzie Johnson:I'll say it though, you said library fine and I'm like, oh, that's that executive function piece. This is where I need growth and I'm thinking right now that I probably have some library books.
Mackenzie DeJong:Do you have a fine to pay?
Mackenzie Johnson:I can teach the concept of borrowing and returning.
Suzanne Bartholomae:Yeah, and the consequence, the consequence, and then it's like, well, the taxing, right? The tax for our library service, but then it's like a fine. I kind of look at it like, well, the library needs my $2. But I won't tell my child that. That's a good story, a good way to spend my money. But anyway.
Mackenzie DeJong:Would that fall under a logical or natural, probably a logical consequence.
Mackenzie Johnson:Yeah, they have implemented a logical consequence of the library that if we don't return things in the time period we agreed to that we have to pay a fine. That would be a logical consequence that I will need to deal with in the very near future.
Mackenzie DeJong:Logical consequences.
Mackenzie Johnson:My logical consequence for my lack of planning on the executive function to return the library book.
Suzanne Bartholomae:I understand.
Mackenzie DeJong:All right, well, I will let you go. Thank you.
Suzanne Bartholomae:Yeah. Thank you. Good question.
Mackenzie Johnson:Yes, it was. Digging into this idea of financial capability today. These three building blocks,
Suzanne Bartholomae:In our next episode, we're gonna talk about you're going to hear more about them next week. But understanding how do we have these conversations with our kids, our preschoolers, our school-agers. Suzanne gave us a great list of some of the concepts that we teach at each age, you know, and then also understanding which of the building blocks at which stage they're really working on building. So we know for preschoolers, that executive functioning is really coming in, and then for our school-agers really some of those financial habits and norms. So you've got to come back next week to see what age group. Spoiler because Suzanne's about to tell you so, yeah, who we talk about next week. teens and money.
Mackenzie Johnson:Yeah, there's some unique opportunities for these teens, right?
Suzanne Bartholomae:Oh, yeah. They are really interfacing with the economy and with peer pressure and wanting to belong and fit in, which usually has a price tag next to it.
Mackenzie Johnson:Yes. So yeah, all of that and more in next week's podcast episode. But for today, thanks for joining us on the Science of Parenting podcast. If you want to learn more about these developmental milestones and your child's ability at each age group, you can check out, like I said, that podcast season on season five, but you can also look on our website. Our website has these categories of different age groups where you can explore lots of stuff related to their development and their age. So check out our website at scienceofparenting.org. Very specific pages tailored with content for your kids.
Suzanne Bartholomae:Cool, that is a great resource, Mackenzie, and so come along with us as we tackle ups and downs, the ins and outs, and the research and reality about the Science of Parenting.
Anthony Santiago:The Science of Parenting is hosted by Mackenzie Johnson, produced by Mackenzie DeJong, with research and writing by Barbara Dunn Swanson. Send in questions and comments to parenting@iastate.edu and connect with us on Facebook and Twitter. This institution is an equal opportunity provider. For the full non-discrimination statement or accommodation inquiries go to www.extension.iastate.edu/diversity/ext.