Easy Money
Written By Catherine Newman
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How Kids Understand Money: A Timeline
Age ranges are estimates, of course. Bill Gates purportedly amassed and sorted his coins for the first time when he was 3 months old.
Birth to 1
For safety reasons babies shouldn't get their hands on actual coins just yet, of course. Still, money enters your child's awareness as a material object, removed from such abstraction as value. Its first appeal is as a shiny, forbidden thing, a glass jar of gleaming coins she can't even reach, never mind touch.
Ages 1 to 2
Next comes the fish-shaped rubber purse full of coins, which Mr. Toddles lugs around and dumps clatteringly onto the hardwood floor at dawn. "At around 12 months dumping sets in," says Claudia Quigg, an expert in child development and founder of Baby TALK. "Dumping really becomes the child's whole life."
Ages 2 to 3
After dumping comes the stacking of coins, the flinging, and then "counting," very loosely defined. Don't be surprised when your 2-year-old tries to count three cents and gets to "10" before her chubby finger stops pointing, says Quigg. "Without the concept of one-to-one correspondence" — meaning each number relates to an object — "kids are still just rattling off the names of numbers."
Ages 3 to 4
And now, the Sorting Years. "To sort, you need to conceptualize what makes things the same," says Quigg, and kids this age have the chops. Ask your preschooler if he can separate the silver coins from the copper ones. The big from the little? The ridged from the smooth? (Why nickels and pennies are bigger than dimes but worth less may be the question of American childhood.)
Ages 4 to 5
Once they've truly learned to count, kids can start to think about coins in terms of value and equivalence: a pair of dimes is 2 but also 20 cents; a quarter is 25 pennies, 5 nickels, or 2 dimes and 1 nickel (and later, one super-bouncy ball). "This understanding comes so naturally to kids who really get a chance to experiment with money," Quigg says. So bring on play scenarios involving grocery stores, restaurants, subprime mortgage lending.
Ages 5 to 6 Their understanding of basic math deepens. This has been happening all along; Barbara B. McGrath, author of a best-selling counting book, identifies money as a favorite counting tool (after candy and snacks, of course). McGrath says these "hands-on manipulatives" (developmentspeak for "stuff you can touch") are a good way to ensure an interest in math.
Ages 6 to 7 They begin to (fitfully) grasp fiscal abstraction. "Stores should just keep a bucket of money by the cash register," my son once mused. "It would make it so much easier for everyone to buy things." Concepts like how you can spend money when you don't have it, how you get it, and what it pays for are hard enough for adults to grasp — it's no surprise most children are mystified by them. Kids may be baffled that an entire box of toothpicks costs a mere 79 cents ("Didn't someone have to whittle all of those?").
Ages 7 to 8 With allowance comes deferred gratification, earned interest, and learned generosity. There may be an anthropological curiosity about money's past lives as wampum, doubloons, or salt — and questions about the gold standard or national debt (you may need to check a book out of the library). And when your kids, like kids of every era, become historians of inflation ("A Coke really cost five cents?" we asked then; "Candy bars were only 25 cents?" they ask us now) you'll feel like a dinosaur lumbering in from the past with a buffalo nickel in your claw.
Ages 9 to 10 As the complexity of mathematics multiplies, money buys your child a real-life occasion to practice new skills. "It's a fantastic way to learn about decimals and place value," says Peggy Shannon, a math professor at Greenfield Community College in Massachusetts. "But fractions are trickier. A quarter is great — it's a quarter of a dollar. Perfect. But it's a pity about the nickel. Couldn't they change that? Call it a 20th? It's not even made of nickel anymore." Still, you will likely find yourself referring your child to dollars and cents as she grapples with homework.
Ages 11 to 12 Quigg describes financial abstraction as "an ever-evolving understanding," and now the age of innocence is past. Big kids are full of hard questions about loans ("Were you kidding when you said the bank still owned most of our house?"), credit ("Why does Mom call American Express 'our plastic sugar daddy'?"), even status ("But everyone has a Prada iPod cover.") and charity ("Can't we give half our money to UNICEF?"). They may bring you to your knees, but you can't ask for more teachable moments.
