I’ve mentioned in a previous article that I’ve purchased piggy banks for my 4-year-old daughter and her 2-year-old brother. For now, all we’re doing is collecting coins and, to them, it’s still a game about who’s piggy will fill up the fastest. Occasionally, we talk about what we’re going to do with all the funds collected but they’re still too young to fully grasp the actual value of the coins they’re collecting.
David Whitebread and Sue Bingham of Cambridge University co-authored a study titled Habit Formation and Learning in Young Children. They found that most children’s financial habits are already formed by the age of 7. By this age, they are able to count money, understand that it can be exchanged for goods and they also seem to understand the concept of delayed gratification. The study also highlighted the impact of parents’ financial habits on their children.
Global financial literacy rates are exceptionally low which have been directly linked to poor personal financial management. Many of the people that I interact with admit that their habits are as a result of a lack of guidance or information regarding personal financial management.
If you have children or have access to children that you care about, you have a unique opportunity to positively impact their financial habits with a few simple steps.
- Talk to them. Talk about money. Make it less awkward and just simply talk about it. Talk about how you make money and what you do with your money. Talk about how you must be careful with it because it’s a limited resource that needs to fund so many important things in your life (and theirs)
- Make it fun. Find age-appropriate games and books about money, buy them piggy banks and allow them to enjoy the process of learning about money
- Practice what you preach. If you really want to impact young people’s finances, show them what it means to be financially responsible. It’s one of the best gifts you can give them
- It’s never too late to start so don’t fret too much about missing age 7. Just get started and keep going. Not just this youth month but every month, while you still have an opportunity to influence them