You are walking through the store with your four-year-old little girl, and she seems to have an eye for everything.  “Mom, check out these sunglasses?  How about these sandals?  I would look great in this outfit!”  It’s cute to watch them bounce around and be so excited, but at the same time, it might be telling you something more.  It may be telling you that you have a natural-born spender on your hands.

Most people don’t think about kids and money in that way because, well, they are kids.  However, studies have shown that kids are much more aware of what is going on around them “moneywise” than you might think.  There was a Cambridge University study (2013) that showed kids, by the age of three, can grasp basic money concepts.  Moreover, by age seven, many of a child’s money habits are already set.

Yes, you read that right … many money habits are set by age seven.  Most parents are not even thinking about having money conversations with their kids, at least not much past the piggy bank and spending vs. savings.  The reality is, kids are sponges, and they take in everything.  These conversations have to start early in life, around age two or three.  Good habits are easier to learn than bad habits are to break.  So, where do we start?

Here is a link that will help you in determining age appropriate money conversations to have with your kids:

Spender vs. Saver

After many years of research, studies have shown that everyone is born with a money personality hardwired into their DNA, just like hair color or how tall you will get.  Since these tendencies are there from the beginning, it can be relatively easy to identify your child’s primary money personality just by observation.  You will find out pretty quickly if you have a natural-born spender or saver.  There may be some of you that are realizing that they have a natural-born spender and thinking, “Oh no! They may be living in my house for the rest of my life.”  Take a deep breath and stop worrying.  While there may be a natural assumption that a “spender” is bad, the truth is there is no right or wrong personality.

Both personalities have pros and cons.  It’s far more essential to know which personality your child tends towards, as this will give you a better idea of where they will need guidance.  Having this knowledge will help you balance out the spender or saver that they naturally are born to be.  Again, there is nothing “right” about being a saver and nothing “wrong” with being a spender.  The main goal is to teach your child how to handle money, independent of their money personality.

Curious about your child’s money personality, follow the link below and take a short quiz that can help you identify which aspect is more substantial – the spender, or the saver …

Kidz Money Personality Quiz

Once you have determined their dominant money personality, it’s crucial to help them navigate a healthy relationship with money.  It seems obvious that spenders could have an issue with being broke all of the time and make impulsive decisions; however, they also tend to be incredibly generous, fun-loving individuals.  Savers tend to be more patient and responsible, yet they can be stingy and have trouble spending or even giving.  The negatives on both sides are no way to live.  That is why it is so vital to determine your child’s money personality early.  Once you are able to see where they struggle, you can figure out ways to counterbalance those tendencies.  It will not be easy, and it will not be a one-time fix.  Repetition is the key to success.  It will be hard not to give in, but if you do, it will only hurt them in the long run.

While a money personality does appear to be ingrained into a person, we are capable of learning both good and bad behaviors as we age.  Starting early and keeping the conversation going throughout childhood is the best way to help your kids form a healthy relationship with money.  They will make mistakes, and you have to let them.  That is often the only way to learn.  However, it’s better for them to make $5 to a couple of hundred dollar mistakes instead of $5000 mistakes.  It’s a process that must be taken step by step, just like everything else in life.  I promise, if you take the time in their childhood to teach these valuable lessons, it will be a game-changer for them in life.

Teach Your Children Well:  Money Habits Are Set By Age 7

Photo by Aarón Blanco Tejedor on Unsplash