Why Talking About Money with Children Matters

Margaret echelbarger
Margaret Echelbarger

Financial literacy is more than just understanding the value of coins and bills, and encompasses a broad set of skills and knowledge that empowers individuals to manage their money effectively. Teaching children financial literacy from an early age provides them with the tools to make sound financial decisions in adulthood.

Margaret Echelbarger, assistant professor of marketing in the Stony Brook University College of Business, researches how children develop as decision makers, particularly financial decision makers.

Kids, Echelbarger explained, do not always understand the persuasive intent of advertising. Particularly on social media, it is difficult to distinguish an advertisement from regular content, and children as young as infants are being exposed to advertisements through YouTube, showing that children are being primed to be consumers from when they are born.

Children are also being exposed to online currencies in games such as Roblox and Minecraft, which can be confusing for children since they are not engaging with the currency itself, but rather buying coins, bucks or various items to help progress and succeed within the game. With children bombarded with advertisements and messaging, parents question what they can do to help their children become good consumers and to make informed financial decisions.

Not talking about money is a privilege, Echelbarger emphasized, as low-income families, for example, may not be able to avoid discussions related to money. More generally, money and finances should not be a taboo topic with children, as this can backfire since it signals that this is not something the child can talk to the parent about if the child has a problem.

Echelbarger research assistants
Child Consumer Behavior Lab research assistants Samantha Navarro and Teasia Crenshaw recruit children for Child Consumer Behavior Lab studies at the Port Jefferson Dragon Boat Race.

“What research shows,” explained Echelbarger, “is that early economic socialization experiences, which includes things like talking about money, are associated with better financial health outcomes among young adults. And in fact, many Millennials report wishing that their parents had talked to them more about money.”

Adults have a unique opportunity to empower children by talking to them in ways that are age appropriate and easy to understand, as well as providing role models for appropriate financial behavior, Echelbarger noted. A visit to the grocery store may be viewed as an opportunity for a conversation to discuss looking for and shopping for sale items, brand and price comparisons and a food budget.

Echelbarger said the holidays are also an opportunity to express the money values of the family through donations or service work, and to introduce conversations about money and charity to children in ways that are less explicit.

The earlier we talk about money with children, the more comfortable they will be making decisions for themselves and feeling empowered, she added. And for adults who do not feel financially literate themselves, there is value in saying to a child that you may not know the answer, but it is something you can research together.

Echelbarger was interviewed in November on the Wall Street Journal podcast Your Money Matters on the topic of How Online Currency is Changing the Way Kids Spend Money.

Families may sign up on Echelbarger’s Child Consumer Behavior Labwebsite to hear about future research studies, or visit the lab’s Instagram page to read about recommendations for raising good consumers.

“We can’t escape money in this society, and we have to give our kids hope. One way we can do that is by empowering them to be good financial decision makers and knowledgeable decision makers,” said Echelbarger.

— Beth Squire

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