The Age of Toddlers
David Wolpe (
Wednesday, October 22, 1997

When little Jack rides-a-cock-horse in the peaceful confines of the back yard, is it time to teach him about money and investing? Should this be done while he's gamboling, or should you wait until he's gambling?

While little Catherine has dialogues at the age of 3 with her imaginary friend named Delila, should her reveries be shaped so that she thinks of Delila as a someone who's going to teach her about investing? At what age should we inject thoughts of money, value, compound interest, and the stock market into the blossoming psyches of our tots?

These are the questions, surely, that trouble Mommies and Daddies the land over.

Well, fear not, gentle reader. The Fool is here, as usual, with all the definitive answers to every question you could possibly have. Er… actually, OK, there is no such thing as a completely bulletproof, definitive answer for parents. But with our usual incisive minds, sharpened as smooth as any Gillette (NYSE:G) blade, poised to cut straight to the heart of the most vexing conundrum, we'll do our best.

In this and succeeding articles, we'll offer up some thoughts about kids and investing. We'll begin, this week, with The Age of Toddlers, then move to Elementary School Years, then on to Junior High And Beyond. Along the way we'll pass along information about games and projects that have been successfully set up in schools, and we'll take a look at some developmental issues as well. And, of course, we'll invite you to share your stories and lessons on our message boards.

The Wong Twain Wide

Two things should be kept separate and distinct: first, what you should be teaching your children; and second, what you should be doing for them – investing for them – at the same age. In other words, even though little Pablo may not yet be ready to hear about the siren-like allure of a price-to-earnings ratio, you can still be socking away some money for his college education. After all, long after he's shed his baby fat, discarded his Tommy The Train videotapes, and given up his frog-whomping slingshot, he'll want to be moving on to other toys -- like a car. He'll need money to plow into his fraternity's beer kitty. He'll need money for that skiing trip to Mount Snow. He'll need dazzling threads so he can impress the wrong kind of girl. And you, doting parent that you are, will not want him to be caught short.

That is why here at the Fool we like to say: "It's never too early to begin investing." With the astounding power of compound interest and the available tools here at the Fool, you can learn how easy it is to invest in the Foolish Four, or even in a simple index fund. Either of these approaches can accumulate capital at an astounding rate, over time. Time is your friend. In the sphere of long-term investing more than any other, time is money.


We and our children, however, live in the here-and-now. So what can you teach a toddler about money? There are books which espouse stacking neat piles of nickels and dimes and quarters, and urging your 2-year-old to pile up nickels until she has a dollar's worth; then dimes, then quarters. This, of course, assumes a prodigious knowledge of mathematics. If you find that even your 5-year-old says things like, "How old are you, Daddy? Are you a million hundred and seventeen?" you might take pause before you introduce the subtler nuances of long division.

If, on the other hand, your child shows a genuine curiosity – even an aptitude – for things mathematical, then by all means, plunge right in. Here are the very sensible sentiments of renowned pediatrician T. Berry Brazelton: "In the pressured world of families today, many parents of children aged three or younger will wonder when to begin teaching them to read and write. My response: Don't, until she demands it. It's all too easy to overdo teaching letters and numbers." He goes on to say that the timing of the learning is not nearly as important as the child's desire to learn. With this in mind, it's probably more important that the child has fun, and comes to feel that learning is a part of playing, rather than an alien and tedious task.

She may be delighted, before this age, with a piggy bank. Children love to hear the clatter of money falling into a pink ceramic pig more than anyone else in the world, with the possible exception of parents. Developmentally, though, this doesn't mean that they're ready to understand what saving is all about.

An illustration: our 4-year-old had the habit of climbing into bed with us in the middle of the night. Much as we loved this, we began to long for those bygone days of uninterrupted sleep. We hung a little tally-sheet from her bedroom door handle, and every night that she successfully stayed in her own bed, she got to put another sticker on the sheet. When she got to a total of five, she knew she'd get a long-awaited sleep-over with a friend. She was counting, and seeing something accumulate, but she wasn't yet "adding" in the abstract.

Developmentally, a child is generally able to grasp quantitative differences around the age of 5. This means that if you say, "We had five cookies and we ate two," you might be surprised and delighted (if you're paying attention) to hear, "So we have two left?"

So: the short answer to this week's question -- what can you reasonably expect a toddler to learn? -- is: not a heck of a lot. Yee-haw! Let them play. Let them have fun.

Next week: We'll take a look a little farther down the road, when Catherine's a little longer in the tooth. When, for that matter, she's lost her baby teeth and has seen her new ones grow in, and has begun to have fun learning about investing at home and in school.

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