By Taylor Schulte | Finance News
Our behaviors and attitudes towards money start forming early and maybe earlier than we think.
As a Cambridge University study on childhood money behaviors showed, kids can learn and take on new processes and tendencies by age 7.
“Approaches, practices and skills which are modeled, discussed and demonstrated by parents and other significant adults, are most likely to be influential ‘levers,’ supporting the development of efficient habits and practices,” the study noted.
On the flip side, however, teaching your kids money lessons or “explicit forms of financial knowledge” appears to be “ineffectual in shaping or changing their behaviors.”
In other words, the financial actions our children observe — good or bad — could impact them for life. Further, what our kids see is a lot more important than what we say.
For parents, this revelation may be both exciting and frightening. If we’re able to show our kids positive money habits and skills early, the study showed, we may set them up for a lifetime of success. But if we don’t teach our children early — or they pick up negative ideas about money elsewhere — it might be harder to teach financial literacy later down the line.
As my wife and I gear up to have our first child in April, I’ve found myself reflecting on things that my family taught me about money at a young age. Which life experiences taught me positive money habits, and how could I possibly impart those ideas on my own child?
Thinking through my past while planning the future has been a fun exercise. The more I challenge myself to dig up old memories, the more lessons I come up with.
Like that one time my grandfather saw me walk over a penny on the ground without picking it up. He quickly taught me that 100 pennies are worth a dollar; that every little bit adds up. To this day, I can’t walk past change on the ground without thinking about how disappointed my grandfather would be if I didn’t stop.
Another time, my father bought me a life-sized crayon piggy bank. It probably took us years to fill it up, but I still remember the day when we cashed in all that change. While my dad gave me this gift mostly for fun, the experience still taught me how to save and delay gratification.
And for sure, I’ll never forget a trip I made to the bank with my mom at age 7. She opened up my first savings account and helped me deposit my first $20. When the first statement came in the mail, she showed me how to read it and taught me about earning interest. This experience forced me to take responsibility over my money at a young age — and that compound interest was truly magic.
With a baby on the way, it’s more important than ever for me to model the money behaviors I want to see in the world. And for me, that means being responsible with the money I work so hard to earn and investing as if my future depends on it, because it does.
But I also know that telling my child won’t be enough. I have to show him or her, slowly but surely, and in ways that will resonate long after I’m gone.
To see the original version of this article, visit tinyurl.com/gm4eltt.
—Taylor Schulte, CFP, is the CEO of Define Financial and the founder of StayWealthySanDiego.com and is passionate about helping people make smart decisions with their money. He can be reached at 619-577-4002 or [email protected].
