05/30/2014 02:35 pm ET Updated Dec 06, 2017

How Kids Learn About Money


Very recently, I was talking with someone who has a fear of dogs. She can trace this to a dramatic incident as a small child where she was terrified by an aggressive barking dog. She admits that thinking rationally, this one incident decades ago, should have no bearing on her current values and behaviour, yet it is still influencing her decisions and emotions every day.

The same is true of our attitudes and values around money which very often can be traced to childhood influences, either through repeated exposure to a parent's habits and language, or like the barking dog, a single dramatic event. Recent research at Cambridge University has revealed that a child's beliefs about money are largely imprinted before the age of seven. These financial blueprints can be positive and empowering but sadly more often can set limitations and fears.

Think for a minute and list some of the statements you heard about money growing up.

Chances are most people's top five include at least one of these:
• "Money doesn't grow on trees"
• "The rich get richer and the poor get poorer"
• "Money can't buy you love"
• "I just don't know where it all goes"
• And the often misquoted "The love of money is the root of all evil"

Each one to some degree, paints a negative picture around having money even though they probably came from well-meaning parents, teachers and even religion.
Add to this the way that wealthy people are often portrayed in TV, films and the media. Successful business people are regularly shown as the villain, the greedy, scheming man or woman at the heart of the evil empire. Not much of a role model that many kids will want to aspire towards.

If a child grows up immersed in these negative, often emotionally charged, feelings about money they will potentially hold these attitudes and beliefs for life, unless they can later identify and challenge them.

If for example a child grows up with a belief that money only comes from hard work, how will they respond later in life to an opportunity to invest in the stock market or in real estate? Chances are an adult carrying the belief that money only comes through hard work will not take those opportunities or may not even notice them.

If this is true then how can we as parents help our children grow up with positive, empowering beliefs about money? Thankfully there has been some movement recently towards teaching financial education in schools, but in many cases this will centre on the mechanics and ignore the underlying beliefs.

To help our children to succeed in the money game, it is important to think about the language we use and the behaviors we demonstrate. If you want your child to learn to save, demonstrate how you save. If you want your child to develop positive money values, use positive language around earning, spending and managing your own finances. Even very young children can take an interest in having and spending money. The earlier they learn good financial habits the more likely those habits will be still serving them later in life.

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