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How to Raise Money-Smart Kids

December 30, 2016
in Kids

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 the age of 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 notes. 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 shows, 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? For example, 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 and 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 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...

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