7 Strategies for Raising Kids to Be Good at Money
Financial education experts share tips for teaching money literacy from a young age
You may have heard of the Stanford Marshmallow Experiment, a psychology test developed in the 1960s to measure a child’s ability to delay gratification. When I was a kid, my mother once ran her own version of the experiment at our kitchen table: “You can eat this marshmallow now,” she told me, placing a single one in front of me, “or if you wait five minutes and don’t eat it, you can have a second marshmallow when I come back.”
Captivated by the idea of two marshmallows, I waited patiently for five minutes until she came back into the room and then devoured my reward. When my mom performed the same test on my younger sister a few years later, my sister figured out the genius hack of licking the marshmallow and placing it back down, getting a little bit of pleasure while still technically qualifying for her prize.
The marshmallow test isn’t exactly an objective barometer for willpower. In the years since the original Stanford study, other research with more diverse subject pools has found that socioeconomic background also plays a significant role in whether a child will eat that first marshmallow. Running makeshift psychological experiments on your own kids will likely provide more entertainment than actual insight.
Still, the spirit of my mother’s test was on the right track: Tolerance for delayed gratification is intricately tied to how well people manage their money, and it’s a concept that provides the groundwork for a lifetime of healthy financial behaviors. Below, experts in financial education offer some more effective techniques for raising a child to be good at money.
“When you’re giving a child money, you can’t then lament that they just spent all the money. Of course they did; they have no impulse control.”
All of them agreed unanimously on one thing: There is no “right age” to start these lessons. But the earlier you begin introducing financial concepts in a tangible, age-appropriate way, the better. Here’s how.