Teaching Children about Money: Applications of Social Learning and Cognitive Learning Development Theories

By Martin, Allen; Oliva, Juan Carlos | Journal of Family and Consumer Sciences, January 1, 2001 | Go to article overview

Teaching Children about Money: Applications of Social Learning and Cognitive Learning Development Theories


Martin, Allen, Oliva, Juan Carlos, Journal of Family and Consumer Sciences


ABSTRACT

Without proper financial education, children can be very vulnerable in the marketplace. Poor financial skills often result in delayed financial responsibilities. Parents and educators need to take an aggressive role in teaching children age appropriate and effective financial lessons. Developmental theories such as social learning and cognitive learning must be understood. Children are greatly influenced, from an early age, by the social environment in which they live. They learn behaviors by modeling what they observe and process the available information. Many experts have suggested ways to teach children about money and their recommendations and techniques are illustrated with applications of the developmental theories.

Young adults today are faced with financial challenges and decisions greater than previous generations. Credit is part of the culture and a "must have now" mentality is the norm. There are certainly long-range ramifications for the young adult who lacks the ability to save or who has amassed a great deal of consumer debt. The financial decisions that a child makes early on in life will affect his or her ability to become a financially secure adult. if children are not taught the benefits of saving, using credit wisely, and other money management skills, their ability as adults to buy a home or to plan for retirement may be greatly hindered. Young adults with poor financial planning skills are often paying off student loans and credit debt well into their thirties. Bankruptcies among persons under 30 continue to rise and this is, possibly, due to inadequate financial education and poor planning.

Many experts in the field of family and consumer sciences have found that financial planning is a concept that occurs over the entire life cycle (O'Neill and Brennan, 1997). Developing an early awareness of spending and saving concepts will likely translate into efficient consumption later. Educators and parents do have resources to help them in educating their children regarding money management. Several extension publications exist such as the Rutgers Cooperative Extension "Teaching Children about Money" program (O'Neill, 1998), as well as several web sites such as www.asec.org, www.fefe.org, and www.jumpstart.org. The purpose of this paper is to assist family and consumer sciences professionals in dealing with questions raised by parents regarding age-appropriate financial learning activities. At the same time, the effects of financial education will be considered in light of child development theories, particularly cognitive and social learning theories. Additionally, the reader will learn about experts' suggestions for teaching children to manage money and factors influencing children's financial behaviors.

Helping children learn about money is a basic life skill that must be taught at home as early as possible. Studies reveal extremely low levels of financial literacy among American youth (Jumpstart, 1997). Schools often do not include personal finance in their curricula and parents are sometimes unsure of age-appropriate techniques to teach children about money. Experts in the field indicate that teaching children about money not only increases their level of financial literacy but also enhances their knowledge about money-related values (e.g., charity) and common money transactions (Godfrey, 1995). Godfrey also suggests that money lessons can be taught to instill citizenship values such as the reasons and importance of tipping, tolls, and taxes.

Just as is done in other areas of study, the level of development of the child must be considered when designing a teaching strategy concerning financial education. The teaching technique employed at each level, as the child matures, should take into consideration the cognitive abilities. Age appropriateness is a key element in teaching children about money. Preschool children develop concepts such as conservation, numbers, and measurement. …

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