As financial institutions and employers watch the twenty-something generation struggle with money matters, there has been much talk about the importance of financial education for young people. But how young should you start?
A recent report by the Consumer Financial Protection Bureau (CFPB) offers compelling reasons for starting financial literacy education for children as early as elementary school. According to the report, childhood financial attitudes, habits, and norms begin to develop between ages 6-12. Teaching children heathy money habits at this age can have lasting effects, setting them up for a lifetime of financial success. In specific, CFPB recommends focusing on two primary areas in elementary school:
- Financial Habits and Norms
We already know that children learn social and cultural behaviors at a young age, by observing the behaviors and attitudes of the people around them. According to the CFPB, financial behavior is no different. The report argues that”the values, standards, routine practices, and rules of thumb used to routinely navigate our day-to-day financial lives” can – and should – also be taught to young children. In practical terms, this means that children who are exposed to healthy financial habits at a young age tend to grow up to be adults who also have healthy financial habits.
- Financial Knowledge and Decision-Making Skills
Beyond socialization, kids also have the ability to start learning concrete financial skills at a young age. The CFPB notes that”skillful money management, financial planning, goal setting, and financial research” are among the hands-on skills that must be taught in order for children to have a healthy financial foundation. For example, teaching elementary-aged kids about saving money, managing a basic budget, comparison shopping, and setting money goals are skills that will last a lifetime, and will give them the financial confidence and knowledge needed to grasp more complex financial topics at a later age.
The financial world that our children will inherit is an increasingly complex one. In an age of online shopping, digital payments, global trading, and sometimes deceptive lending, we need to set up our children for success – and this means teaching them solid financial habits and skills at a young age. To learn more about family financial capability and examine how it can help inform your consumer financial education solutions download our guide.
Study from the Consumer Financial Protection Bureau: Building blocks to help youth achieve financial capability. (September 2016). Retrieved January 27, 2017, from https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/092016_cfpb_BuildingBlocksReport_ModelAndRecommendations_web.pdf