March 2022 | Lina Banytė-Surplienė
Your kid’s basic money habits are formed by the age of 7.
If you have a kid who is over 7, you might have had a frightening thought – Oh no, it’s too late to start! And let me guess, another thought was – How can kids’ basic money habits be formed by the age of 7 if they have no experience with real money until they turn 7?
Yes, you are right – children under 7 do not have much experience with real money but money habits are formed at an early age by learning how to delay gratification (e.g. when a kid gets a dessert only if he or she eats the main meal, or gets fun time only after homework is done, etc.) and by observing their parents.
There are two basic rules when it comes to the right time to start talking about money.
Rule #1. Start the money talk with kids as early as possible
“My child does not understand anything about money yet! But he knows what the word “buying” means,” – shares a mother on Facebook.
If a child knows the meaning of the word “buy”, then he or she does understand SOMETHING about the money. Research shows that 3-year-olds can grasp the idea that money could be exchanged for goods at a grocery store. Our little ones observe us when we pay for the goods in cash or by card. They already understand that at the grocery store you cannot just pick the goods that you like and go out. You need to pay before taking them with you.
So, start the money talk with your kids as early as possible.
But what should we talk about to the kid at the age of 3 to 6?
One simple idea for the little ones – encourage your child to buy something for cash at a grocery store. It can be a chocolate bar or soap bubbles – the only thing that matters is that the kid gives the cash to the cashier and gets the item he or she has chosen (and it does not matter whether your child can count or not!). If the kid does that (I have tried this with my then 3-year-old Konstantinas) he or she will understand that money is the means of exchange. There is also one really nice side effect to this – your kid will be endlessly happy! ?
Another tip for the parents – observe your child and once the topic of money becomes interesting to him or her, be ready to answer his or her questions!
And the final tip for parents with small children – teach them to wait. If they want an ice cream cone in the morning, promise to buy it in the afternoon. If they wish to watch their favorite movie now, ask them to wait for an hour or two before you switch it on. Teaching our kids to wait is one of the most wonderful gifts we can give them.
Rule #2. If you have not started early, the next best time is now
Let’s say you already have a couple of materialistic teenagers at home. The good news is that it is not the end of the world.
A few curious scholars decided to find out whether materialistic mindset in teenagers could be changed and if so, would the changes stick?
Kids, ages from 10 to 17, received an intervention – they met for 3 sessions, along with their parents.
Sessions included:
- Distribution of a 3-chamber bank (one each for sharing, saving, and spending) and discussion cards to inspire family conversations about money and values.
- Conversations about the difference between needs and wants, and the role advertising plays in confusing the two. The kids were asked to track their spending and discuss it.
- Finally, there was a discussion about pocket money and how to keep the money conversation going in the future.
The result? The kids that received the interventions showed better self-esteem than they had before the sessions started. And the impact was lasting! Conversations and reflection seemed to make a real difference.
Now, imagine us using this approach continuously at home, and starting earlier.
Bottom line
No matter how old your kid is, start by telling stories about the times when you regretted a purchase or were scammed on the Internet. Our stories reflect our values and that’s the most important thing that our kids need to understand.
If you have not got it yet, get your free copy of “10 signs you are raising money smart kids” here: