When do you think is the ideal time to start teaching your kids about money? At school? University? When they leave home? Turns out it’s younger than that – much younger in fact.
Behaviour experts from the University of Cambridge reviewed previous studies to determine how children learn in general, and how they learn about money in particular. They concluded that money habits are typically formed early in childhood.
“The window is zero to 7,” according to Guy Shone, research director for the British government’s Money Advice Service, which published the study. “It’s very hard to reverse those habits later in life.”
What this tells us is that it’s not necessarily the knowledge of how the JSE works at age 7 that’s important, but the behavioural traits linked to healthy money management that need to be taught and learned before your children turn 7. So what are the two most important money-related habits you can teach your kids before they turn 7?
1. Money is earned
Establishing the link between work and remuneration early is a vital building block in this journey. In young children, we advise parents to give children chores to do – and that some can be remunerated and others aren’t. It creates a clear understanding that in all families some work needs to be tackled simply because one is part of a certain team, and that other work gives one financial reward. The bottom line? Money comes from work – not a machine in the wall or a card in mom’s purse.
2. The ability to plan ahead and delay gratification
Once money has been earned, it gives parents an ideal opportunity to teach their children two key behavioural habits: planning ahead and delaying gratification. How? By having saving and spending goals that children can relate to – a coveted toy for instance – which requires a combination of saving said hard-earned money over a period of time – before achieving their goal and going shopping.
It’s a great way to kick off learning key money management habits that can include the whole family too!
Author: Hayley Parry, Money Coach at The Money School