8 Things My Toddler Has Taught Me About Money

by Elizabeth Lang on 16 June 2014 (0 comments)

Toddlers don’t understand the concept of money. But my two-and-a-half–year-old son, William, has taught me an enormous amount about money through his everyday activities. Here are eight of the best things he has taught me.

1. Negotiate Everything

Toddlers are expert negotiators. My son constantly asks for “five more minutes” of playtime outside before dinner and “one more book” before bed. Usually his requests are for things that are slightly negotiable. But he also tries to negotiate the seemingly non-negotiable or requests a third alternative when presented with two choices — like “chocolate cake” when given the option of eggs or oatmeal for breakfast. And sometimes, this third choice gives him an alternative he would never have been presented with in the first place. (Perhaps chocolate milk instead of plain milk with breakfast.) The lesson: Negotiate everything. Even when it seems like there is only one or two choices, there might be a third. For instance, I would never think to ask for a discount at a big department store, but I know someone who asks for and frequently gets “secret” coupons or discounts from sales associates. Take it from a toddler, and don’t be afraid to ask for chocolate cake at breakfast.

2. It’s Better to Make Money Than Spend It

My son recently got a toy cash register. He doesn’t really understand the concept yet, but likes the sound the buttons make, taking money from me to put in the register, and running my (old and expired) credit card through the swipe machine. But whenever I try to get him to be the customer, he’s not interested — he tries to keep the money (or make me give him a $100 bill as change for the quarter he paid with). He doesn’t understand what he’s doing quite yet, but there is a good takeaway here: It’s better to be the one receiving money than the one spending it.

3. The Best Things Are Often Close By and Inexpensive

We are fortunate to have a great backyard, and after my spouse and I took a recent four-day vacation (without William), he started taking “vacations” in the backyard. He says “I’m going to Paris” and walks up the hill to an area with a number of trees and bushes and plays. On a similar note, even at two and a half, he is still happier playing with a large box than the product that it came in. What have I learned from this? That amazing adventures and things are often more within our reach and cheaper than we think.

4. Be Impulsive (Sometimes)

At the end of winter, when it was 40 degrees and the snow was melting, my son came into our kitchen first thing in the morning and exclaimed “Isn’t it nice out today?!” Then, he ran outside in just his PJs and bare feet and happily played in the yard for several minutes before his feet got cold. If you have or have had a toddler, you know that they are quite impulsive, for better and for worse. And usually something they’ve impulsively decided to do brings them the greatest joy. As we get older, we forget how much pleasure impulsivity can bring. It’s OK to impulsively splurge on a fancy meal, last-minute vacation, or great seats at the theater every once in awhile. Chances are you’ll be happier for it. 

5. Take Risk

William has a spectacular skill of finding the highest point in a room, and before anyone notices, climbing up there and jumping off. Toddlers are known for pushing boundaries and taking uncalculated risk. This is how they learn limits, but it also enables them to grow. Adults can also grow personally, professionally, and financially by taking risk. You aren’t (likely) going to become a millionaire by putting all your savings in a 0.1% interest account, so you should take a risk and invest in stock index funds and companies you believe in. Chances are, this responsible risk taking will lead to greater wealth.

6. Recognize That Change Is Difficult and Takes Time

I won’t ever forget the consequences of the night I was so frustrated by my son not listening at bedtime that I skipped the rest of his normal routine of reading a second book and singing songs and insisted he go right to bed. Two hours later he was finally asleep after far too much struggle. Toddlers aren’t known for their adaptability and willingness to change. But it’s not just fussy toddlers who take time to adapt to change – we all do, especially when it comes to financial habits. Don’t try to reduce your spending by 30% in one week or increase your income by 50% in a month. Smaller, gradual changes are more likely to stick.

7. Ask Lots of Questions If You Don’t Understand Something

Winter snow has given way to spring rainstorms, and consequently my son has bombarded us with questions about thunder. Can you show me a picture of thunder? What does thunder smell like? Can we get a ladder and climb to the sky and touch the thunder? Many financial concepts are just as amorphous and confusing to us as thunder is to a toddler. Never be afraid to ask questions if you don’t understand an investment, retirement plan, or even something as seemingly simple as a credit card rewards program. Even if you feel like it’s a “dumb” question, it probably isn’t — and it’s better to feel silly asking than to lose money on something because you didn’t understand it. 

8. Giving and Sharing Can Be Difficult, but Rewarding

We have been working hard on the concept of sharing with William. He has mastered being on the receiving end — “Will you share that with me?” is a favorite phrase usually referring to something like my last bite of ice cream or piece of chocolate. But he is learning to grasp the concept of sharing with others and gathers great satisfaction from it. Of course, when he hands something to you with a big smile on his face and says “I will share this with you,” “this” usually refers to a half-eaten piece of now-soggy toast or something equally unappealing. But we happily take it and show that we appreciate his willingness to share. Similarly, we have recently translated this concept to our own finances and significantly increased our charitable contributions. Having done so, I can confirm — it feels really good to share.

What have you learned from your toddler about money? Share in the comments!

This post was sponsored by Amex EveryDay Credit Card, the new credit card from American Express that celebrates #EveryDayMoments and everyday purchases. All thoughts and opinions are my own.

Check out more infographics at AmericanExpress.tumblr.com.

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