Foundations of Financial Well‐Being: Insights into the Role of Executive Function, Financial Socialization, and Experience‐Based Learning in Childhood and Youth

Abstract

During childhood and youth we build the foundations for financial well‐being later in life, acquiring the knowledge, skills, attitudes, and personality traits that enable us to manage our finances as adults. This article reviews literature from consumer science, developmental psychology, and allied fields to gain insight into moments during youthful development when interventions are likely to have greatest impact. We find promising avenues for influence during each developmental life stage. Many present truly novel approaches to financial education—such as focusing on improving executive function in young children (critical despite lacking apparent “financial content”), emphasizing financial attitude development through dual‐generation financial modeling for elementary and middle school students and their parents, or intentionally teaching financial heuristics and other practical skills to later adolescents and young adults. Overall, this article proposes a range of innovative strategies to improve financial education, from early childhood through young adulthood.

Like Father Like Son: How Does Parents' Financial Behavior Affect Their Children's Financial Behavior?

“…However, our results should not be taken to mean that parental influence only takes during adolescence. In fact, children could start to develop general skills at a very young age (Drever et al ; Whitebread and Bingham ) and parental financial socialization could also begin as early as before children start school (Drever et al ; McNeal and Yeh ). It is possible that the parental influence observed in our sample is the result of parental financial socialization at earlier stage if parents' financial behavior and children's self‐control skill are stable through time.…”

Revaluing the Role of Parents as Financial Socialization Agents in Youth Financial Literacy Programs

“…The way that family members communicate about financial matters, for example, will be relevant (see, e.g., Koerner and Fitzpatrick for a review on consumer family communication patterns). In addition, the quality of interpersonal family relationships will be important in order for a successful financial socialization process to develop in a family context (Drever et al ; Gudmunson and Danes ; Kuczynski and Parkin ). Edwards, Allen, and Hayhoe () have demonstrated that parents' financial attitudes and conduct influence the extent to which children are willing to discuss personal finance matters with them.…”

Creating Financial Capability in the Next Generation: An Introduction to the Special Issue

“…Another way to build financial capability is through sound financial advice and guidance, which begin with parents and caregivers. In addition to Drever et al (), who underscore the important role of parents in preparing children for financial functioning, another contribution in the special issue discusses parental influence. Van Campenhout (), in “Revaluing the Role of Parents as Financial Socialization Agents in Youth Financial Literacy Programs,” examines the parental role in helping youth develop financial capability.…”