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Study shows kids need hands-on experience to learn financial responsibility

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Kids who have the opportunity to manage money when they’re young are more likely to be financially responsible as adults, says a new BYU study.

“It’s clear that what parents do when their children are young affects their financial outcomes later on,” said Dr. Ashley LeBaron-Black, a BYU professor of family life and lead author of the study. “Beyond talking about money management, it’s very important that parents give children the opportunity to manage money and make decisions with money from an early age.”

The study recently published in Family relationships, surveyed more than 4,000 young adults and asked them a variety of questions to understand how they learned to manage money from their parents during childhood. The study results found that while it was important for parents to talk to their children about money management and model good financial behaviors, these efforts alone were not enough to financially empower children and prepare them to prosper as young adults financially. responsible.

The research found that the most effective thing a parent can do is provide experiential learning opportunities for their children, allowing them to monitor their own money and practice making financial decisions. Children who learned from experience were more likely to be confident in making financial decisions as adults.

In another study using the same survey data, LeBaron-Black and her team found that how parents taught children about money was linked not only to financial outcomes, but also to mental health outcomes in young adulthood. “Providing children with their own experiences in handling money leads to greater financial self-efficacy throughout their lives, which correlates with greater life satisfaction, less depression and anxiety, and greater financial independence from children.” parents,” LeBaron-Black said. Her research also found links between parental financial education and the quality of young adults’ romantic relationships.

Letting kids manage money can be intimidating for parents at first, but LeBaron-Black suggests starting with simple activities. For example, a young child could be given a simple 3-slot bank to hold her money: one slot for savings, one for giving, and one for spending. As they get older, kids can practice budgeting, saving for short-term goals like a bike, saving for long-term goals like college, paying tithing, spending money wisely, and opening accounts. savings or other investment accounts. Parents can help them identify their own financial goals and intentionally work toward them.

“Keep trying, even when it seems hard,” LeBaron-Black said, noting that preparing kids with a solid foundation in money management takes time and consistency. “In the years to come, the small efforts he is making will pay off for his son.”

It’s a pattern that can be applied to many aspects of parenting. Discussions are vital, but verbal teaching alone is not enough. “When parents give children the opportunity to make their own decisions and experience the consequences, whether positive or negative, children will be much better at making decisions throughout their lives,” LeBaron-Black said.


Teach kids about money worth, finances and relationships


Information:
Ashley B. LeBaron-Black et al, Talk is Cheap: The Financial Socialization of Parents and the Financial Well-Being of Emerging Adults, Family relationships (2022). DOI: 10.1111/fee.12751

Provided by Brigham Young University


quotes: Study Shows Kids Need Hands-on Experience to Learn Financial Responsibility (2022, September 23) Retrieved September 23, 2022 from

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