How to teach kids to deal with money
Researchers recommends that parents takes up the task of "financial socialization" as part of their parenting. Parents could easily and effectively give kids hands-on practice managing money. Results to this effect is published in the Journal of Family Issues.
The research explores the importance of parents giving children real-world experience with money to help prepare them financially for adulthood. It also suggests that future research should consider this sort of experiential learning a third key method of financial socialization.
Parents can give their kids practice with money in a variety of ways. They might give them a regular allowance, pay them for tasks that go above and beyond their normal chores, reward good grades with cash, or encourage them to save for special purchases or charitable donations. The specifics don't really matter, nor does the amount of money, which may vary based on a family's financial situation.
"If the first time kids use a credit card or have to work or have to save up for something or have a bank account is when they're on their own, that's not a good time to be practicing," said LeBaron, the main author of the study.
"It's important for parents to give kids age-appropriate financial experiences when they're monitoring them," LeBaron said. "Let them make mistakes so you can help them learn from them, and help them develop habits before they're on their own, when the consequences are a lot bigger and they're dealing with larger amounts of money."