As we parent our children, we only have so much time to spend with them. And we all want them to turn out well as independent adults once they leave home and set out on their own. It makes sense to spend time with children on the topics that will make them good adults later in life.
One of those areas that can make a big difference is teaching about money management.
Well, Duh, Of Course It Does
It is important to teach children about money and how to manage it, budget it, and use it. This should not come as any surprise, but a study at BYU found that children who were able to experience money management by working with small amounts of money and learning how to save, spend, and give away themselves did much better than those who were just told about the topics. This difference between teaching and experiencing perhaps is an obvious observation. But the study of 4,000 young adults determined this objectively.
This should give optimism to parents, particularly since not all parents feel like they are very good at managing money themselves. By allowing their children to learn these skills experientially, they are setting the children up for a better financial life as adults. By having this experience, young adults are then able to be more confident when making financial decisions.
Financial Literacy Improves Mental Health
This may seem like an odd connection, but another study from the same data also found that children who had an opportunity to learn by doing with money ended up with a higher life-satisfaction, less depression and anxiety, and higher financial independence from parents.
This connection might not seem as obvious. Why would learning about money improve mental health?
Money problems can generate a lot of stress which can add to depression and anxiety in life. So those who have a better handle on money flow in their household can reduce that area of stress. This naturally leads to more satisfaction in life, as well as the ability to be more independent of parents.
It Can Even Help With Love Lives
Another study looked at young adults (18-30 years old) who were in relationships and discovered a connection between their romantic relationships and their ability to manage money as learned from their parents as young children. Since these individuals had more confidence with money and managing spending and saving, this reduced stress in the romantic relationships. Money is one of the major wedges that cause problems in relationships, so the self-confidence that comes with money management knowledge can also reduce stress in the relationships.
Schools Need To Do Their Part
School systems are recognizing the benefits to society of having financially literate adults. Unfortunately, this is not a priority for many school systems. In the Delaware Valley area, only the state of New Jersey requires financial literacy as a topic to be covered prior to graduation.
Parents, particularly those who did not get a good foundation in this area, are pleased with the teaching of these concepts in school. They know the struggles they went through with money and want to avoid that for their children.
Other Sources Of Financial Education
But what if you are not good with your money but still want to help your children with their financial education? A daily money manager can be a great source of information. We can provide financial education for adults to help bring order and a spending plan to an existing situation. For example this blog post has some ideas for young adults starting out independently. We can also provide education on topics that can be of value to both adults and their children.