Financial Literacy for a 5-Year-Old

On the first week of January, we have started Little Girl C on a 1£ allowance. Her allowance is not a given right, she has to be helpful around the house – help with her plate, tidy up her toys and the like. We don’t strictly control it but she is pretty decent about it.

When she was about to get her second 1£, she asked if we could go shopping at Peter Jones. I asked whether she wanted to spend all her money or just a bit and whether she wanted to wait a bit longer, but she affirmed she wanted to spend the 2£. I agreed – after all, it was her money. Hubby B rolled his eyes imagining the scene it would be to find out what 2£ can’t buy. We made it a family program.

Off to Peter Jones

The next day, we hopped on the bus and went to Peter Jones, where we were also planning to buy Baby S birthday gift. Soon we started going through the shelves as she asked me the price of all the things she liked. For the big things, and to avoid major disappointments, I suggested she could start making a birthday list. It worked to diffuse the frustration.

As we went through the store, there was nothing she liked below 14.99£. She was confused and it did not help that the shelves didn’t have the prices. She kept on having to ask rather than browsing on her own. Hubby B nervously asked if this was a good idea at all. We were both waiting for the moment she would explode in anger. She stayed focused and I suggested we could try another store, one that she loves (though not cheap). Smiggle. Her smile was back as she replied:

"that is my favourite store in the whole world"

I was confident she could at least buy a pencil, so we ventured King’s Road to go.

Homelessness

On the way, we passed a homeless man. She asked what he was doing and I explained how he was asking for help – and how sometimes people may be in situations with no house and no food. She lowered her eyes and said: “but I never helped“.

I told her sometimes I did and perhaps one day she would want to use her allowance to help a homeless person. She was clearly thinking about it, but understandably it was not the right day. I explained that the day before, as I had bought food in Waitrose for our dinner, there was a charity collecting food for the homeless and told her about the 6 or 7 extra goods I got and why. She asked questions, her eyes were interested. This tour was already worth it in my eyes. 

Smiggle and Discounts

As Hubby B gave up on us to do some real shopping, we found that Smiggle made her life easier because it had prices everywhere and it aggregated items by price range. Unfortunately, all she could buy was indeed a pencil and she was not keen.

There was a sale going on, so I explained some of the things were cheaper. She found a “squishy” as cheap as 6£ after discount and looked at me with a sad face. I did not bulge, as much as it was breaking my heart. I trusted my instinct that this was an important moment in her life. As I bought a water bottle for school to assist her feeling of frustration, I made sure she knew this was not a toy and not what she was paying for. She wandered through the store and concluded she did not want a pencil.

More Financial Literacy in King’s Road

It was then that I remembered - Tiger!

I told her about this store where everything was 2£ (or almost) and perhaps she could find slime, which she is passionate about. Excitedly, she ran out of Smiggle (her former favourite store) and we got on our way.

It was not close by, so I started explaining her more stuff on the way. When I told her a one-way flight to Lisbon (which she truly enjoys) cost 100 of those coins, her eyes popped out in disbelief. I then went on to explain that is part of the reason we sometimes take different flights, where both of us take the last flight as we are less flexible on our schedule, but that also means it is more expensive.

Usually, she gets upset that she gets to go last and Baby Bro gets to go first to Lisbon. Realizing a 4x coins difference between flights she claimed the unfairness of it. Was it fair that daddy and Baby S went on a “cheap” flight – poor them! Maintaining a serious look facing her newfound sense of injustice, I explained that we save as a family, and so we can have other things.

I then went on to explain why we are not flying directly to Geneva when we go skiing and how daddy was smart to find out a flight through another country. I wanted to make it exciting (more than explaining the money point) because I was afraid she was not going to love the idea in a few weeks. Her mouth opened wide when I told her the price difference (in 1£ coins) and she went left wing on me.

As excited as she was that she was getting to know Brussels, she claimed it was not fair and the people in the aeroplanes just had to make it cheap so everyone could go. I explained that they also had to pay for staff, food, gas and the maintenance of the flight. We could just choose not to go if we could not afford it. She went silent. In her head, I believe she did not want to think of the not going option.

At last… Tiger!

And so we got to Tiger. We had to go around twice as she found so many possible things that could be bought with 2£. I stopped myself from buying anything as the store is just too funny. She ended up buying a slime that makes a “funny” noise. As she walked to the cashier I stayed behind watching her full of pride move forward to hand in her coin. When I explained to the cashier what was happening he smiled at her and said:

I am proud to be the one accepting the first purchase of your life“.

Cashier at Tiger

We kept the receipt and took a picture. Mission accomplished.

Proud Mum

I was a proud Mum, for so many reasons. First, the fact that she did not lose it at the first store when she realized 2£ could not buy any of what she initially wanted. Second, the fact she was curious and absorbing the point that things cost money and we have to make choices. And thirdly, obviously that my little girl was grown up enough to make a choice like this, and I was there with her. She was a proud kiddo when daddy arrived and we re-told him the entire story.

As we walked home, she got tired. She asked if we could take a bus. Daddy did not resist to stretch it. “Well, do you want to spend 3£ on the bus or to go out to Gails for a cake“. She did not hesitate – we’ll walk. It was freezing, I did not want to walk. But I knew this was the first time she made such a choice.

Teaching literacy to a child is a tough and risky job (just as teaching anything else to a child really). If I go back to rich dad poor dad and other articles on the matter, here are my 50 cents on what our path for the next few years will encompass:

  • Lesson #1 (ongoing): Things cost money – a lot of it;
  • Lesson #2 (ongoing): We should be wise about how to spend our money, and see which options are available for what we want to buy;
  • Lesson #3 (starting): Sometimes we have to wait and save until we buy “bigger” things;
  • Lesson #4 (starting): Sometimes the best use of our money can be to help others who don’t have it;
  • Lesson #5 (future): There are ways to grow our money if we chose not to spend it.

There are many others, but I have just started this mission. Conscious that my daughter is more privileged than many, I want her to grow up knowing money is a limited good and one that she needs to understand.

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