Money Misconceptions

Prepare your children for the future by teaching them these four finance basics.

By Erin Quinlan; Photo by Alexandra Grablewski

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Money literally isn't what it used to be.

When my 4-year-old son and I walked by the ice cream shop recently, I gently broke the news that I wasn't carrying my wallet and couldn't buy him his usual treat. But instead of dissolving into weepy disappointment, he offered a solution: "Go to the ATM and get some dollars!"

In an age of debit cards, online bill paying, and direct deposit, young children have less of an understanding of money and its value than kids of previous generations did. That's especially troubling in the current economic climate, which has underscored the importance of financial responsibility. "You can begin to teach kids about money in their preschool years," says Julie Moghal, PhD, director of psychology and social services at CHOC Children's Hospital of Orange County, California. "Just remember to keep your lessons simple." Start by addressing some of the zany misconceptions children have, and you'll be well on your way to raising a money-savvy kid.

Next: Kids think: Money is only for buying stuff.

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