While we all know it is important that as parents we teach
our children about money, often we either don’t at all or delay it because it’s
an uncomfortable subject, or we just aren’t sure how to do it. However, while I
personally have known it is important, I was very surprised to read recent
research that says that our approach to money is basically set by age 7. "The
window is zero to 7," said 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."
David Whitebread of Cambridge University, a co-author of the study, said: “The ‘habits of mind’ which influence the ways children approach complex problems and decisions, including financial ones, are largely determined in the first few years of life. Simply imparting information is now recognized as being ineffective in this area.
“By contrast, early experiences provided by parents, caregivers and teachers which support children in learning how to plan ahead, in being reflective in their thinking and in being able to regulate their emotions, can make a huge difference in promoting beneficial financial behavior.”
While learning about money, and its relative value is important, it is also important to teach children by that age to learn how to delay gratification. Just think how the generations growing up on Video on Demand, Googling for instant information, and countless other examples, are inclined to desire and have “instant gratification”. One way to do so is to have children buy something in the future that they will have to wait and save for.
While I have given my children allowance since they were young, I’m pretty sure I didn’t start giving them allowance by age 7, and if so, not much before then. Nor had I spent much time teaching them about money habits then. I have been doing so since. The challenge is, as the study shows, the mindsets have to be changed when they are past that age, whereas they can be shaped prior. However, better late than never.
In my next posting I will give some tips and examples that I researched and personally experienced when it came to giving my kids allowance, and even if you don’t have children, you may get something out of it as well…