A family member sacrificing taking a vacation to save money for a tutor or to enroll a child in extracurricular programs can teach children a valuable lesson about financial priorities.
It pays to teach your kids to be generous.
One of the most valuable lessons parents can give their kids about money is how to spend it on other people, new research suggests.
Teaching children early life lessons about giving to others could contribute to their personal and financial well-being later in life, researchers at the University of Arizona concluded in a study published in the Journal of Family and Economic Issues.
Researchers interviewed 115 subjects, including college students, and a random sampling of parents and grandparents about what they learned about money from their parents. The parents and grandparents in the room were also asked what they taught their kids about the topic, giving researchers insight on how money lessons are passed down across four generations.
‘If a certain percentage of your money goes toward giving, that’s the start of a budget right there.’
The researchers didn’t ask the study participants about giving away money, but 83% brought up the subject and mentioned that giving was an important part of the financial education they received or gave.
Americans gave a total of $410 billion to charity in 2017, up 5.2% on the previous year (or 3% adjusting for inflation), according to data from Giving USA, an annual report based on research by the Indiana University Lilly Family School of Philanthropy. That’s the first time charitable giving had risen above $400 billion in a single year.
Since the recession ended in 2009, charitable giving increased 30.6%. The reward may be priceless no matter how old you are or how much you give — other research suggests that spending money on others can boost happiness and overall well-being.
“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,” lead researcher Ashley LeBaron, a doctoral student at University of Arizona’s Norton School of Family and Consumer Sciences, said in a statement.
“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,” she added.
Children closely watch their parents, and that scrutiny actually seems to inspire moms and dads to be more generous with their money, the researchers said.
“Parents and grandparents report that they have this awareness that their kids are learning financial attitudes and values from them, so sometimes they were more giving because they knew that their children were watching them, and they wanted to set that good example,” LeBaron said.
Children closely watch their parents, and that scrutiny seems to inspire moms and dads to be more generous.
Previous research has shown that people are more generous when they think they’re being watched.
Teaching kids how to give has myriad benefits. It teaches kids financial basics like budgeting and saving for important expenses, the researchers said. One example: A family member sacrificing taking a vacation to save money for a tutor or to enroll a child in extracurricular programs.
Study participants discussed having money jars for different budgets from a young age, with one jar for money they’d use for savings; another for money they’d spend on everyday needs; and a separate one for money they’d give away or donate.
The system helps kids be more careful about what they put their money towards. “If a certain percentage of your money goes toward giving, that’s the start of a budget right there,” LeBaron said.
Teaching kids how to be more generous may also make them happier individuals. “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 noted.
Other studies have shown that kids learn more about money from their parents than any other source. Young children and even toddlers exhibited more happiness when they gave away valuables like favorite snacks or toys, according to a 2012 study published in the Public Library of Science journal. Being more generous could be beneficial to overall wellness at any age, they said.
Participants also revealed different reasons for teaching their kids about giving, including a sense of religious duty, wanting to help others and a desire to give back.
They also talked about three different types of giving: charitable donations such as monetary gifts to religious or nonprofit organizations; acts of kindness that help people directly in need, like feeding the homeless or volunteering; and investments in family, like making a financial sacrifice so a kid can enroll in an activity like playing sports or going to summer camp.