Teaching kids to think about money

It’s time for a shift from teaching children rote-learned financial rules of thumb to instilling dispositions and a thinking process that underlies good financial decision-making.

Two concepts can make all the difference to how we approach financial decisions: future orientation and self-regulation. Thinking about the future is incredibly important when managing money. This is a tendency to consider future consequences and a willingness to delay gratification in favour of longer term goals.

Self-regulation is where we control our thoughts, feelings and behaviours. Being aware of our financial motivations and having the ability to critically analyse our decisions is also important.

Research shows that both parental behaviour and dispositions have an impact on their children’s financial behaviour into adulthood.

Simply discussing money can help children build financial independence by practising making decisions. Giving children pocket money is another strategy for accomplishing this.

Research also shows that financial hardship – living on a limited income and going without – can be just as useful in shaping financial understandings as the experience of growing up rich. In fact, there are things children observe and experience – like problematic gambling and the financial fallout of divorce – that can influence them to think and feel more conservatively about money.