Childhood Money Habits Make Huge Difference

Childhood money habits make a huge difference. They can have a lasting impact on a child's financial well-being throughout their lives. They can set kids up for success or doom them for failure.

And whether parents choose to teach their children about money or not, kids are going to learn about it. By that I mean they are going to develop feelings, attitudes and habits about money.

Unintended verbal and non-verbal messages from family members and friends are unavoidable. Communications from advertisers are inescapable.

Kids money habits. attitudes and values are going to be shaped. It is primarily a question of who, when, how and how frequently the messages and lessons will be imparted.

Noted personal finance expert Dave Ramsey is partially right when he shares that if parents don't teach their kids about money, someone else will. He is only partially correct, because parents will be teaching their kids about money. The real questions are whether parents:

• will be doing it intentionally or unintentionally; and

• will be guiding and teaching them the right money habits and principles.

7 Compelling Reasons

Here are 7 compelling reasons why childhood money habits matter and make a huge difference in the outcomes of kids lives:

1. Research from the University of Cambridge indicates parents have between birth and approximately age 8 to shape kids money habits. At age 8, adult money habits are largely set for life.

2. Saving, budgeting, and understanding the value of money lay the foundation for responsible money management throughout life. If a proper personal finance education is not put in place early, money misery is very likely to follow. Foundational skills are the building blocks upon which more advanced skills are built. Without a strong foundation, it becomes difficult to progress and excel in any endeavor.

3. Childhood money habits shape an individual's mindset and beliefs about money. Positive money habits, such as saving regularly and spending wisely, can foster a healthy and positive relationship with money. They promote financial responsibility, discipline, and long-term financial success. Research has shown individuals with a positive money mindset, characterized by beliefs such as "money is a tool for achieving my goals" or "I have control over my financial situation," are more likely to engage in responsible financial behaviors, which can contribute to long-term financial success.

4. Great money habits, such as delaying gratification, setting financial goals, and making wise spending choices, help develop financial discipline in childhood. Research has shown that childhood experiences can have a significant impact on an individual's ability to delay gratification and self-regulate, which are important skills for achieving long-term financial success. This discipline can carry over into adulthood, leading to responsible spending, avoiding impulsive purchases, and making smart financial choices, which can prevent debt and financial struggles. Neuroscientific research has also provided evidence of the relationship between childhood experiences, brain development, and self-regulation.

5. Early money habits, such as saving money and understanding the importance of an emergency fund, lead to increased financial security. Having a solid foundation of financial security can provide a sense of peace and stability, and protect against financial crises, unexpected expenses, and economic downturns in the future.

6. Positive money habits, such as investing, can lead to wealth accumulation over time. Starting early with investing and understanding the concepts of compound interest and long-term investment can significantly impact an individual's financial success and wealth-building potential in the future. There are lots of examples to demonstrate the point. Here are two: (1) Peter Lynch, a renowned investor and former fund manager of Fidelity Magellan Fund, started investing at a young age. Lynch purchased his first stock, shares of Flying Tiger Airlines, at the age of 11. He continued to invest in stocks throughout his teenage years and later went on to have a successful career as a mutual fund manager, achieving remarkable returns for his investors; and (2) Mellody Hobson is a prominent businesswoman, investor, and the co-CEO and President of Ariel Investments, one of the largest African American-owned investment firms in the United States. Hobson developed an interest in investing at a young age and started buying stocks when she was just 12 years old. She continued to invest in stocks and developed a successful career in finance, becoming a leading figure in the investment industry.

7. Childhood money habits can also shape a child's values and relationship with money. Learning about money management, financial responsibility, and charitable giving early on can foster positive values around money, such as generosity, empathy, and social responsibility.

A Closing Thought or Two

Childhood money habits play a vital role in an individual's financial well-being. Encouraging and nurturing positive money habits in childhood can have a lasting impact on an individual's financial success and overall financial health in the long run.

Companion Reads, Listens, and Resources

• 8 Money Lessons Wise Parents Teach Their Children!

• A Parent's Guide and Money Map to Money Talks with Kids, Question 1

• Have a conversation with kids about the money song: Get in the Habit

• Introducing Sammy's Let's Get Kids Financially Literate Campaign

Your Thoughts

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Share one or some of your suggestions that will help make it fun and easy for parents, teachers, and community leaders to talk to and teach kids about money.

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How You Can Help Sammy Rabbit Advance Kids and Families Financial Literacy Levels

Let's collaborate to get kids, families, and communities advancing their financial literacy knowledge, habits, and skills. Here are a couple of ideas on how you can help and we can work together.

1. Give custom, co-branded Sammy Rabbit story and activity books to kids in your local community!

2. Collaborate and partner with Sammy on "1" project in 2024: See a Menu of Ideas or suggest your own.

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