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Adult money habits are set by the age of seven

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
23/05/2013

Parents have a ‘powerful’ influence over their children’s future money habits, a study has revealed.

Research by the Government’s Money Advice Service found that adult money habits are set by the age of seven, highlighting the power of parents to foster money skills at home.

Based on evidence in the report, the Service is urging parents not to underestimate the effect their own good – and bad – money habits will have on their children.

It believes a combination of good habits at home combined with simple and playful parenting and teaching resources is required in order for children to develop good money management skills, which are essential to help them become financially capable adults.

Authored by behaviour experts at Cambridge University, the report reveals that by the age of seven most children have grasped how to recognise the value of money and to count it out.

By this age they will also understand that money can be exchanged for goods, as well as what it means to earn money and what income is.

Most children in the UK are also capable of complex functions such as planning ahead, delaying a decision until later and understanding that some choices are irreversible; but children under eight years old have not developed an understanding of the difference between ‘luxuries’ and ‘necessities’.

Co-author of the study, Dr David Whitebread, of Cambridge University said: “In today’s world there are many pressures on young children and their families which make financial education increasingly important. The ‘habits of mind’ which influence the ways children approach complex problems and decisions, including financial ones, are largely determined in the first few years of life.

“Simply imparting information is now recognised as being ineffective in this area. By contrast, early experiences provided by parents, caregivers and teachers which support children in learning how to plan ahead, in being reflective in their thinking and in being able to regulate their emotions can make a huge difference in promoting beneficial financial behaviour”.


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