Category: Info for consumers

When your child learns self-control, it helps their financial future, too

New students should look closely at college-sponsored bank accounts and shop around

The childhood years are an important time to learn about money. But money is an abstract concept. Even before young children’s brains are ready for the idea of money, they can start getting on track for a solid financial future.

Young children can develop abilities such as self-control, planning ahead, and creative problem-solving. These might not seem like financial skills, but they are helpful in building a financial foundation.

Good things come to those who wait

Cookie Monster, the Sesame Street Muppet with a constant hunger for cookies, is teaching kids about self-control. Watch this video of him resisting his favorite treat , and afterwards, try talking with your children about times they’ve had to wait for something they wanted. A study shows preschool children who viewed the Cookie Monster video were able to wait four minutes longer for a snack than children who did not.

What’s the connection between cookies and personal finance? In the first five years of life, children go through rapid neurological growth and can quickly expand key abilities such as self-regulation and planning for the future. As your children grow older, they’ll need these skills and abilities (known in child development as “executive function ”) when they make more complicated decisions about making plans or budgets.

As a parent, you are the most powerful influence on your children’s financial lives. We spoke with Cathy, a young mother, and were inspired by her story that shows how young children can develop executive function skills.

The 3-year-old party planner

“My son was very excited about celebrating his third birthday with a special treat with all his friends at daycare. I asked him what kind of fruit he wanted to serve for his treat, and he enjoyed planning the menu of peaches and blackberries. We went to the grocery store together and got the fruit a couple of days in advance.

The next morning when I offered him a peach with his breakfast, he said, ‘No, Mama. We can’t eat that because it’s for my birthday party.’ He knew what the payoff of saving the peach would be, and how that fit into the plan for his party. And having the party just like he planned it was really motivating and important – that idea was more exciting than eating one of his favorite foods. I was really proud of him, and feel like this skill of planning for something he cares about, and sticking to the plan, will serve him well in life.”

Saving a treat for a special occasion might not seem like a money decision, in the traditional sense. But Cathy’s son had absorbed a meaningful lesson that can serve him well as an adult—about how patience can be rewarded. Parents can look for chances to present their children similar opportunities, so that they practice self-restraint and delaying gratification.

Ideas for enhancing skills to support good financial decision making

See a guide of activities you can engage in with your child, from infancy to adolescence , to enhance executive function skills that provide the groundwork for good financial decisions. When you read to your child, try keeping the story going, by playing the roles of different characters—staying “in character” helps children focus attention and practice holding multiple ideas in mind at once.

For more ideas on building your kids’ financial lives, check out our resources for parents.

Read a more detailed study we commissioned about the stages of development for children’s financial knowledge, attitudes, and skills.

Stay tuned for part two of our three-part blog series about the role of parents as their children grow older. As your child starts their preteen years, they’ll be exposed to more influences from peers and advertising. If you are a parent or caregiver, you can help steer your children through the next phase of their financial development.

The first name in this blog has been changed to protect the privacy of those involved.

Read part 2 of this series: The right shoes and common sense can help your preteen gain financial ground
Read part 3 of this series: The teenage years are for practicing money decisions in a safe space

Due to technical issues, the commenting feature of our blog is temporarily unavailable. We’re working to bring this functionality back, and look forward to hearing your feedback and comments about the CFPB’s work soon.