Research has revealed the early life lesson that can led to financial wellbeing
There have been many studies that suggest that we should start teaching children about money as soon as possible but there’s a key message that may not immediately come to mind.
New research from the University of Arizona suggests that the most valuable lesson we can teach kids about money may be how to appropriately give it away.
In the week that 19 of the world’s richest signed a global pledge to give away at least half of their wealth, the study led by Ashley LeBaron asked multigenerational participants what they learned from their parents.
Those who were parents or grandparents were also asked what they had taught their children.
Nearly 83% of all participants said – without prompting - that financial giving was an important part of the financial education they gave or received.
"When you think about money and what kids learn about money from their parents, most of us wouldn't think about giving as one of the basic principles of finance," said LeBaron, a doctoral student in the Norton School of Family and Consumer Sciences in the UA College of Agriculture and Life Sciences. "We tend to think more in terms of budgeting and saving and things like that, so it was surprising, but really cool, to see that giving was so prevalent."
The reasons for giving
Not all participants had the same reason for teaching their children about giving. For some it was religious duty, for others a desire to help others or to give back.
They also cited three key types of financial giving:
- Charitable donations - from monetary gifts to religious or charitable organizations.
- Acts of kindness - including donations, gifts or acts of service provided more directly to people in need.
- Investments in family – such as financial decisions made by parents to benefit their children or family.
Learning about budgeting
LeBaron said that teaching children about financial giving is a good way to teach them about other finance basics, for example by having one jar for savings and one for giving.
"If a certain percentage of your money goes toward giving, that's the start of a budget right there," LeBaron said.
But there are other benefits too and parents and grandparents should make sure that children witness their financial giving so that they learn the behaviour.
"People who are generous tend to be happier and have healthier relationships, so this is shaping not only kids' finances but aspects of their health and well-being," LeBaron said.
She added that the number of participants who stressed the importance of giving was inspiring.
"In finance classes, we never talk about giving," LeBaron said. "But we learned that giving is maybe one of the more important facets of financial socialization, so we need to be paying more attention to how it is taught."