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Mental, Physical and Emotional Benefits of Early Financial Literacy

by Team Sammy

Mental, Physical and Emotional Benefits of Early Financial Literacy

Teaching financial literacy early is loaded with benefits, thus it can have an excellent impact on other areas of your child’s life in addition to money. Studies have shown there is a relation between money, mental, physical and emotional health.

Many adults experience financial struggle. This often results in high levels of sustained stress. That stress frequently leads to unhealthy habits and living. This might include binging on junk foods, neglecting exercise, unnecessarily starting arguments, being easily agitated, avoiding mental and emotional healthcare. 

As a parent, giving your children a solid foundation of financial literacy can produce multiple payoffs beyond the obvious benefits derived from becoming more financially secure and self-sufficient (independent).

Money management and fiscal control instill discipline. They set up a mindset that encourages positive actions to carry over into other areas of life. Let’s examine how acquiring healthy financial habits can improve a person's mental, physical, and emotional well-being.

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Mental, Physical and Emotional Connection

Dr. Jeffrey Bernstein states in a Psychology Today article titled: Why Financial Literacy is Vital for Happiness:

...I have been coaching parents of struggling children, teens, and adult children for over 30 years. Some of the biggest concerns I have seen are the many children of all ages, especially teens and young adults, who don't understand how money really works... 

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From ABC Life Literacy Canada:

...Those who have financial stress are more likely to report poor overall health and experience its negative effects at work and in personal relationships. Arguably even more serious is the spiralling effects created when mental health challenges and financial stress compound together...

There was a study done in 2015 that explored the relationship between money and physical fitness. It found, in many cases, personal finance and fitness go hand in hand.

As stated above, when someone struggles financially, this often comes with a high level of stress and leads to behavior that is not in your body’s best interest. Long-lasting financial stress brings frequent pumps of cortisol into the brain. Increased levels of cortisol trigger an increase in appetite.

However, it is not the appetite that is the problem, it is the kind of appetite. High cortisol levels can be lowered for a short period of time by eating snacks with high sugar levels. This is what makes it normal for people to eat junk food when feeling stressed out. 

In many cases, junk food becomes comfort food. People tend to run towards comfort food to escape stress. This will not bring cortisol levels down for long periods of time. Ultimately, if this behavior sequence continues for an extended period of time it runs the risk of obesity and type-2 diabetes. 

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The Domino Effect

There is an underlying issue that comes with a high intake of junk food. When junk food is eaten regularly, your overall energy levels will be affected significantly. 

When you have a job and are consistently eating unhealthy foods, you are almost guaranteed to not commit to any form of physical fitness. This lack of physical activity piled on top of poor food choices only further increases the risk of obesity as well as poor mental and emotional health. 

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The Importance of Starting Early

In a report published by Bank of America in partnership with USA Today and reported on by My Catholic Vantage Financial, author Andrew Pepler discusses how a millennial’s financial state determines his or her happiness and wellbeing in other areas of their life. The report shares the rising levels of anxiety that millennials are facing when it comes to financial wellbeing. The issues they struggle with and stress over range from student debt to managing their money to the cost of living to not having enough money for a wedding.

The situations mentioned above are certainly not how things have to be. One issue for most people entering adulthood is they have never been taught how to structure a financial life. This leads to learning through real life experiences. It's a framework for failure with real life consequences that can easily trap and set back young kids' futures for years.

For these reasons, raising children to be smart with their money will bring them a massive advantage once they reach adulthood. Furthermore, that advantage is likely to grow as they grow, all the way to retirement and possibly for generations. It's not magic or rocket science. It's basic math and money habits.

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There’s Always a Way to Learn

We could all argue financial literacy should be taught in schools. Hopefully, someday, it will be a mandatory school subject. But don't hold your breath or risk your child's future waiting for that to happen. This solution may not be around for years in your state. And, even when it is, it's only a small piece of the solution. With that in mind, your most responsible option as a parent is to take matters into your own hands. Fortunately, lots of outstanding and affordable financial education options exist for every age level, including many that are free.

You don’t have to dive into or do anything crazy. Implementing simple tactics and lessons consistently can pay huge dividends both today and tomorrow. Even just providing your kids with a basic understanding of how important saving is will set them up for success. Teach your child to get into the habit of saving little amounts of money when they receive it can be transformational. It better positions children to continue that and other sound financial money habits throughout their lives.  

Financial literacy tends to be looked at as something that is very complex. In reality, the basics are quite simple. Make habits of saving, investing and spending less than you earn. Avoid carrying consumer credit card debt that requires you to pay interest. These tactics, practiced consistently, week in and week out over time, will result in a predictable pattern of increased financial security, stability and freedom.

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Parting Thoughts

Having a good financial life is almost guaranteed to flow into other areas of one's life. This doesn’t mean being some financial expert with an MBA, instead it is just the consistent execution of basic and timeless personal finance principles. In essence that is what habits are and what makes them so powerful.

So, make sure to begin teaching your children financial literacy basics while they are young, whether that be at two, three, four or five years of age.

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