Money is an important thing in our lives whether we have a lot of it or just a little. And the way we think about money was taught to us long ago when we were children. Eventually, it will be time to teach our own children about how to properly set budgets, spend their earnings and save what they can for the things they will want in the future. Everyone was taught different life lessons when it comes to personal finances and there is now a trend in research on what lessons give the best benefit to young people when it comes to money management.
Learning money management
The evidence coming out of a recent research is showing that the more math that a person learns early in life turns into better ability for money management later in life. Having an education in finance has a surprisingly little effect on over-all wealth but taking extra math classes had a much more positive impact. Just being comfortable with numbers seems to be the most important factor with making responsible financial decisions.
Having an open dialogue about the family budget also helps children with setting personal budgets in the future. Parents who keep the topic of their family’s funds secret are doing their children no favors. Parents might believe they are shielding their kids from feeling rich and bragging or feeling too poor and ashamed but the negative effects of not being able to communicate about money are much more detrimental to the children’s future ability to manage money.
Taking the sense of power away from money will help children realize that cash is simply a tool. If children attach too much emotion and power to money then it can distort their relationship with money. Children need to be taught society’s rules with money instead of looking at money as simply a way to solve problems. Money is for earning, budgeting and saving but children can get the wrong idea of what money is if they are not spoken to frankly about what the purpose of money is.
The nature of people is to forget the things we are taught so another point learned from the research is that lessons to children need to be taught “just in time” meaning just before they will have a chance to practice the behavior. Teaching children the values of savings and spending will have the most impact if the lesson is taught before they start to manage their own money.
Teaching children about money management is just as important as most other life lessons, if not more. And the recent research is finally beginning to help us with evidence from real life situations.