One thing I have learned since having a daughter is that kids are extremely observant. More than you think.
That is why I think the most valuable learning is through observation. Our kids learn far more from seeing and doing, than sitting and listening.
That’s not to say that all methods don’t have their place. It is just that doing and observing tend to stick much better for younger people.
That may seem counterintuitive as our first thought to teach is often to sit our children down and have a chat. The parent is the instructor. The child is the pupil. As the teacher, you may pull out newspapers, spreadsheets, calculators, a pen and paper. The problem with this method of teaching is that it rarely sticks for young people in particular. When there is so much theory, the information doesn’t take hold.
Learning by Modelling (Seeing)
I feel a child learns so much more from seeing it in action.
Want to teach a child to save 25% of their money? Do it yourself first
Want to teach a child to eat healthy? Do it yourself first
Want to teach a child how to invest? Do it yourselves first
If the theory you are trying to teach your child is not modelled by yourself, then it is very confusing for them. Which is it? Do as I say or do as I do? Kids put far more weight on do as I do. They are mini me’s that imitate us. They watch our every move.
Without us even realizing, they are studying and calculating.
They notice every time we buy too much at the shops. They notice what type of food we are buying. They notice how often we get takeaways or go on a holiday. They notice when we go to the rental property to fix the toilet. They notice when we go to the bank to get a loan approved.
These experiences stick. Far more than traditional learning. You can tell a child to not spend all their money, or you can practice these habits and not say a word. The latter in my opinion, will have much more of an impact on long term behavior.
Learning by Experiences (Doing)
The other effective teaching method is having your child learn from trying things themselves within a safe environment. I remember from a very early age, my parents made me buy my own clothes and toys with the money I made from paper routes.
I learned very quickly about several money matters:
How far a dollar goes
Post purchase regret
How to weigh up options and make a decision
How good it felt to save up for a bigger purpose
How to make more money by taking on extra paper routes
I made mistakes with my money, but I learned a heap. Far more than a 10 year old would learn from listening to someone.
We learn most through experiences. When things are new, that presents a dilemma. A challenge. It is up to us to work through it. We will make mistakes. But we will learn from these mistakes until we get better and better because we don’t forget how those mistakes felt. It is the parents job here to help with the learning process.
Final thoughts
All three methods – teaching, doing, and experiencing are important and all should be utilized. However, modelling and experiencing are far and away the most effective way for children to learn about money.
One without the others will not be very effective, so make sure not to put all your eggs in the classroom style teaching bucket.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here