Some fascinating academic research has been released about childrens attitude to money and how they gain financial skills.  Their core findings are that a child’s attitude to money is embedded by the age of 7, and this attitude will be largely maintained throughout their adult life.  The full report is detailed and can be found here.  They look at ways in which good money practise can be taught, which we summarise below.

The question they ask is: what can parents, caregivers and teachers do to encourage positive habits of self-regulation in children and support their financial understanding?

Younger children participate in practices alongside adults; when they first receive pocket money, its by the encouragement of the parent, or possibly grandparent.  It is at this early stage that influences over the child’s attitude to money need to start.    Children learn from observation, instruction and practice, so all 3 experiences will help strengthen the message.

Typically, by the age of four to five, children will understand that they need to pay for things but may not understand that coins have different values.  By five to six years, they will know that some money will not be enough to buy some items.  Only at around age 7 will they understand that money can be exchanged for goods, and that ‘change’ may be returned.

‘Saving’ can be encouraged by tangible activities such as a savings chart, where the child has a target number of coins to achieve, and fills in the coins as they are ‘saved’.  Studies have shown that children enjoy participating in adult-like behaviour, where encouraging the child to exercise conscious control over their decisions can prove to be very successful.

The key conclusion is that teaching young children explicit forms of ‘financial’ knowledge is not likely to have much impact on shaping or changing their behaviour.  What is important are the basic approaches and skills, which are modelled, discussed and demonstrated by parents and other significant adults.  These skills become the ways in which efficient habits and practices become instilled.  Self regulation is the aim, where the benefits and tools of sharing, saving and buying are understood and applied. Influencing childrens attitude to money is a key task for parents and care givers from an early age.