Teaching Financial Literacy to Kids: A Path to Stronger Relationships

From the first piggy bank to the first credit card, teaching children proper money management and budgeting habits requires both time and patience. However, the value of helping kids develop financial literacy cannot be understated.

Lifelong Benefits of Financial Literacy

Children who learn money management skills like budgeting and saving are more likely to carry those habits into adulthood. While the long-term financial benefits of these skills are well known, recent research has revealed a surprising additional benefit: improved romantic relationships in young adulthood.

The Impact of Financial Education on Relationships

A new study published in the *Journal of Adolescence* has found that children who learn proper money management behaviors from their parents tend to have more fulfilling relationships with their significant others as they grow into young adults.

“It’s one more reason why teaching kids about money is so important; it can have relational consequences for them as they grow,” said Dr. Sarah Brown, a family life professor and lead author of the study.

The research surveyed nearly 2,000 participants aged 18 to 30 in romantic relationships. The findings showed that those who learned financial literacy from their parents during their youth enjoyed more flourishing romantic relationships in adulthood.

Financial Behaviors and Relationship Outcomes

The researchers found a strong link between healthy financial behaviors and positive relationship outcomes. Parents who teach their children about money help them develop good financial habits such as saving and budgeting. These habits reduce financial stress, which in turn reduces pressure on relationships.

“The kind of people that are careful with their money and put effort into it are also the kind of people who are careful and put effort into their relationships,” said Brown.

Early Financial Education Matters

A study by the University of Cambridge found that children form fundamental money management habits by the age of 7. This underscores the importance of starting financial education early. Teaching kids about money at a young age helps cement good habits that will benefit them throughout their lives.

Three Steps for Parents to Teach Financial Literacy

For parents seeking to teach their kids proper money management, Brown suggests following a three-step model:

1. Set the Example

Parents should model healthy financial behavior. There’s no substitute for the example parents can set by doing things like budgeting, planning, and monitoring expenses.

“Let your kids see you being good with money and learn from your example,” says Brown. “We’re finding again and again that the example of parents predicts outcomes like financial attitudes, financial behavior, and financial well-being later in life for children.”

2. Talk About Money

Brown emphasizes the importance of having open and honest conversations about money. While it may have been taboo in the past to discuss income, savings, and financial stress, researchers suggest having regular talks about money with kids.

“These are sometimes hard topics, but they need to be talked about, or it’s to the kids’ detriment later on.”

3. Give Them Experiences to Learn

Providing opportunities for children to manage money and make their own financial decisions is one of the most important things a parent can do to help their children form good habits.

“When kids get hands-on experiences to practice managing their own money, it helps them build confidence. Then when they manage their own money later, it won’t be their first experience.”

Conclusion

Teaching children about money management not only prepares them for a financially stable future but also contributes to healthier, more fulfilling relationships. By setting a good example, discussing financial matters openly, and giving children practical experiences, parents can significantly impact their children’s financial literacy and overall well-being.

Sources:

- *Journal of Adolescence*: "Financial Socialization and Relationship Outcomes: The Role of Parental Influence."

- Dr. Sarah Brown's research on family finance education.

- Financial Education Council's guidelines on teaching kids about money management.

- University of Cambridge study on early financial education.