The Magic of Making Money Decisions

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The Magic of Making Money Decisions

Teaching financial literacy at a young age is as important as teaching the ABCs and 123s because it helps children become smart money managers, which leads to a healthier financial future.  

That is why Peoples Bank and The GIANT PIGGY BANKTM program, an interest-earning children’s deposit account and student banking program, is sharing a four-part series of helpful tips, information, and activities on age-appropriate financial topics. Parents or caregivers are encouraged to share these financial activities with young children (ages preschool through 2nd grade). 

The second topic of the series covers introducing children to the important, life-long skill of independent financial decision-making. To read our first article that covers the topic of how to talk to your children about money, click here.

Giving Children Choices

As a parent or caregiver to young children, you’re probably familiar with the delicate balance of when to be “the boss” vs. “the coach.” In “boss-mode,” you’re setting limits and establishing rules with your child. In “coach-mode,” you’re encouraging independence by providing your child with easy choices like:

  • “Do you want applesauce or a banana for a snack?” 
  • “Do you want to go to the library or the park?” 
  • “Do you want to play soccer or baseball this season?”
  • “What do you want to order at the restaurant?”

Children start making simple decisions at a very early age, and if they’re encouraged to continue making decisions when consequences are minimal, then they’ll acquire a sense of responsibility and a skill set to analyze choices. This leads to successful decision-making as an adult when the outcomes are more consequential.  Giving children choices, and including age-appropriate money-related choices in the mix, plays an important role in raising confident financial decision-makers.

How To Make Spending Decisions: A Child-Friendly Approach

Every day, we’re evaluating choices and making decisions. As adults, the number of decisions we make and the speed at which they’re made may seem intuitive and natural.  But, making smart money decisions (not impulsive, reactionary, or highly emotional) is a learned skill that we can teach children. To keep it simple, here are 6 steps to teach your child about making a smart money-related decision. Just remember the acronym: M.O.O.L.A.H

  • Money. Does what you want cost money? For younger children, this is important to discuss. Some things cost money, others don’t. Adding items to a grocery cart costs money. Selecting items online comes with a price tag (even if you can’t visually see the money).
  • Or. Is this a want OR a need? When we teach children to pause and think about a purchase before buying, we help them differentiate between a want or a need, and when it’s appropriate to make each kind of purchase. 
  • Options. Are there other options? Ask children to consider other choices besides the one that they want. Does that change their initial request? Information gathering is key to smart decision-making and helps prevent impulse buying.
  • Limit. What is your spending limit? Do you have enough money?  Delayed gratification is the foundation of financial planning. Start teaching this concept by playing store (value-exchange), giving an allowance (budgeting), or opening a children’s savings account (saving).  For an interest-earning children’s deposit account, check out Peoples Bank’s The GIANT PIGGY BANKTM here.
  • Act. Do you want to make the purchase? Yes or no. Making decisions can be hard, but practice makes it easier. Games like playing store or Monopoly Junior give children real-world experiences that allow them to feel greater power and control in being able to decide what they choose to do.
  • Happy. Are you happy with your choice? Each decision we make shapes future decision-making. Ask your child after making a money-related choice if that made him/her happy. Ask again later. Learning if we would choose differently helps in making better choices next time. 

Sharing each step in the process of decision-making with children doesn’t need to be a structured, strict checklist. Just taking the time to talk with them about making a purchase will naturally cover several of these steps. The more often you explain why you make a purchase for yourself or your family, the better your child will be able to understand how you approach making a money decision. 

Keep an eye out for our next article in August which will discuss The Power of Super Smart Spending Plans. 

About Peoples Bank

Peoples Bank is a local, family-owned bank with nine locations in Central Iowa. The GIANT PIGGY BANKTM is our interest-earning children’s deposit account and student banking program in select schools that aims to provide financial literacy to children in the communities we serve. Learn more by visiting here. Member FDIC.

1. Morris, G. (2021, December 6). Financial literacy for kids: Lesson Plans for elementary students. InCharge Debt Solutions. Retrieved April 27, 2022, from 


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