The No. 1 Mistake Parents Make When Teaching Kids About Money
Warren Buffett: This is The No. 1 Mistake Parents Make When Teaching Kids About Money
Jul 30 2019 Tom Popomaronis, Contributor@TPOPOMARONIS
If there’s one person who understands the importance of teaching kids about financial responsibility, it’s Warren Buffett.
Before he became CEO of Berkshire Hathaway, the legendary investor started a handful of small businesses — starting at age six, when he purchased a six-pack of Coke for 25 cents and sold each can for a nickel. He also sold magazines and gum from door to door.
“My dad was my greatest inspiration,” Buffett said in an interview with CNBC back in 2013. “What I learned at an early age from him was to have the right habits early. Savings was an important lesson he taught me.”
When asked what he thinks is the biggest mistake parents make when teaching their kids about money, the billionaire said, “Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool.”
Time is a factor
Yes, you read that right: Preschool. To Buffett’s point, researchers have noted that 80% of our brain growth happens by age 3.
One study from Cambridge University found that kids are already able to grasp basic money concepts between the ages of 3 and 4. And by age 7, basic concepts relating to future financial behaviors will typically have developed.
“Most parents already know how important it is to teach their kids about money and how to manage it properly,” Buffett acknowledged. But there’s a difference between knowing and taking action.
According to a 2018 survey from T. Rowe Price, which gathered responses from 1,014 parents (of children between the ages of 8 to 14) and more than 1,000 young adults (ages 18 to 24), only 4% of parents said they started discussing financial topics with their kids before the age of 5.
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