How young is too young for children to start learning their financial ABCs?
That’s one of the most frequently asked questions I field from parents. My reply: As soon as your kids want to buy toys, or start counting coins, or can tell you whose face is on a dollar bill. Listen to their cues — there’s really no age benchmark.
But what about school? Is there a grade-appropriate time for kids to start picking up financial literacy skills in the classroom?
Try third grade.
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That’s the recommendation, at least according to new research just published in the spring edition of the Journal of Private Enterprise, a publication of the Association of Private Enterprise Education.
The study builds on a base of earlier research that points to the need to teach children about money at a very early age.
In the latest study, the three researchers monitored more than 2,500 Chicago area third-graders before and after they completed a six-week financial literacy course in 2014 and 2015.
The study used curriculum developed by Money Savvy Generation, a company that promotes financial education. The teaching materials focused on saving, spending, investing and giving.
In addition, students each received a piggy bank developed by the company with four slots — one for each category — so they could put into practice what they learned in the classroom.
In one exercise, for example, third-graders were asked to set short-term and long-term savings goals and then draw a picture of them. One student’s short-term goal was a $10 box of Legos, while the long-term goal was a $500 Nintendo game system.
The research found that the third-graders picked up the core financial concepts. In fact, their “attitudes and knowledge about money improved significantly” after completing the lessons, the study said.
“We would never expect adults to be competent at reading and mathematics if those subjects were not introduced early and repeated regularly in the school curriculum,” researcher Mark Schug said in the report. “In the same way, economic and financial education ought to start early and be repeated often.”
Why should we care whether our kids are tackling money topics in school?
Because there’s a connection between low levels of financial literacy and having problems later in life with high levels of debt, bad credit histories and bankruptcy. That’s why more than lip service needs to be paid to helping kids at a young age develop good money habits.
While any help in the classroom is certainly a bonus, an overwhelming number of children still depend on their parents as the prime source for developing their money management skills.
What can parents do?
The easiest and most natural approach is to look for everyday teachable moments to talk to your kids about smart spending, wants and needs, investing and giving. Talk about the commercials on television, the products going in the shopping cart and the financial choices being made about summer activities.
Having these conversations may also teach parents a thing or two, such as improving their own financial behavior to be a better role model.
Steve Rosen: 816-234-4879