Getting kids started on the financial education path early is strongly suggested by research.
Inhibition is “the ability to stay focused on a task in the face of internal and external distractions.” Self-control is a component of inhibition, and it plays a big part in the financial literacy process. Interestingly, innate, individual differences can be influenced during a child’s rapid executive function brain development between the ages of 3 and 5 (Drever, Odders-White, Kalish, Else-Quest, Hoagland, Nelms, “Foundations of Financial Well-Being,” Journal of Consumer Affairs).
This suggests that it might be a very good idea to introduce younger kids to the concept of saving for a goal, for example, before the age of five, as it might mitigate a natural aversion your child might have to expressing strong self-control. Why leave it up to chance when you can get started teaching your kids money smarts today? Based on my own experience, it’s a good idea to keep any time horizon pretty short in the beginning and to set it up so that achievement is as easy as possible. So no $100 goal for your 4-year-old! My 5-year-old, who is by no means a natural saver, put away $24 for a scooter over a period of two months. Of course, setting up an allowance for your child is a great way to give her an opportunity to develop experiences with money.
Introducing the foundational concepts of financial education for kids begins early. Are you waiting to start? If so, what’s holding you back?
John