Following the Science To Teach Our Kids About Money

By Alec Lindenauer, COR Chief Allowance Officer

“Follow the science.”

That’s a mantra we’ve been hearing for a while now. It didn’t just start with pundits on both sides of the climate change and Covid vaccine debates, but lately it seems like it. At its core, following the science is a philosophy that makes sense … Take verified data that’s been collected in a systematic way, and use that to help guide your decision making. Pretty simple.

But how do we apply science to teaching our children about money? In Summer 2022, researchers at Brigham Young University published a study which answered that very question.

In short, this group of BYU researchers wasn’t satisfied by other studies that simply proved kids who learned about money from their parents grew into money savvy adults. They set out to learn the how and why – the specific ways parents teach their kids about money to find which are the most effective.

Their study was the first to compare the three most prevalent methods parents use to teach their kids about money:

1) Traditional lessons through storytelling, discussion, and “lecturing”

2) Modeling positive financial behavior as a parental role model

3) Providing experiential learning opportunities for the child to practice good financial habits themselves 

After segmenting more than 4,000 now young adults to track their learnings, this team of researchers went to work to learn if those three methods worked equally. And in doing so, they looked to measure not just the strength of the young adults’ money habits, but also how confident they felt in their ability to manage their own finances. 

Here’s what the researchers found:

Lecturing basically does diddly squat. In fact, to quote the study, “parent-child financial discussion had zero direct or indirect associations” with the strength of their money habits or confidence levels. 

Zero! As in nothing!

On the other end of the spectrum, the most impactful strategy was providing children with experiential learning opportunities. Or said another way, allowing our children to have ownership over their own money, and having them practice making financial decisions turns kids not just into money-savvy adults, but confident ones. 

I don’t want to downplay positive parental modeling, however. Their research showed that was effective as well, but not as effective as personal experience. And on top of that, it’s not quite as easy for some parents to exhibit model financial behavior. 

But creating experiences? That’s doable for almost every caregiver. That just requires a bit of motivation and strategy. 

In fact, that’s not just doable … That’s science we can follow. 

A quick addition to the post above ...

We were fortunate enough to host Dr. LeBaron-Black on episode 12 of our podcast, How to Teach Your Child Kids About Money. Here's the video version of that episode:

Do you want to get started on the money-teaching path with your child? Check out our Parent Resources page.