What should children know about money by the time they are five years old, and what can I do to help them learn?

You need money to buy things.

• Have your children identify coins and their value.
• Discuss how you may value something that is free, such as playing with friends.
• Identify items that cost money, such as ice cream, gas for the car, or clothes.

You earn money by working.

• Describe your job to your children, or take a walk around your neighborhood or town and point out people working, like the bus driver or police officer.
• Explain that some people start their own businesses, like stores or restaurants, and those people are called entrepreneurs.
• Encourage your children to think about how they could earn money by setting up lemonade or cookie stands.

You may have to wait before you can buy something you want.

• When your children are standing in line for a turn on the swings, or looking forward to their favorite holidays, point out that sometimes we have to wait for things we want.
• Find three jars (or cans) and label one for saving, one for spending, and one for sharing.
• Suggest that your children put some of the money they get into the saving jar, so they can buy a toy or treat when they have saved enough.

There's a difference between things you want and things you need.

• When you are out shopping, point out essentials such as food and clothing, and ask your child to describe items that she may want but are optional.
• Talk about how your family decides what to buy and what to pass up. Which is more important, buying fresh fruit or cookies, milk or soda?
• Draw a circle and divide it into sections for food, rent or house payments, clothes, and "optional items," to show that there is a finite amount of money to spend.

For more money activities for your child, visit our Money As You Grow section.