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The Easiest Way to Teach Finances to Your Kids

How do you choose what financial information to share with kids? What's really important? According to the Consumer Financial Protection Bureau (CFPB), the most important money lessons actually have nothing to do with money.Fun learning activities

That's the central theme of its new report, Building Blocks to Help Youth Achieve Financial Capability. This report, available online from the CFPB, breaks down financial literacy into three skills: executive function, financial habits and norms and financial knowledge and decision-making. This conclusion comes from a fusion of educational research and social psychology, and it's an important guide for parents.

Financial knowledge and decision-making are the most often included elements in financial literacy. It's the stuff you know. Financial habits and norms are the behaviors and conditions children come to expect. Some of this can be taught, but it's mostly a matter of observation and socialization. Kids pick up these habits and norms from watching their parents and other adults.

 Most importantly, the skill of executive function can be developed even at ages when most financial knowledge cannot. Executive function is the ability to control impulses, make and stick to plans, direct attention and other related tasks. New psychological research suggests that these are all skills where a form of training is needed; the more we practice paying attention to something, the better we'll get at it. Best of all, this ability can be developed at any age.

Executive function, in addition to being the most teachable skill in the report, is also the most important. Kids with developed executive function skills will find it easier to learn new information and practice new skills while also positioning themselves for future success. Of all the factors summarized in the report, kids with strong executive function skills tended to have the highest levels of financial satisfaction.

Interested in finding out more about the report? Check this out here: http://www.consumerfinance.gov/data-research/research-reports/building-blocks-help-youth-achieve-financial-capability/

SOURCES: 

http://s3.amazonaws.com/files.consumerfinance.gov/f/documents/092016_cfpb_BuildingBlocksReport_ModelAndRecommendations_web.pdf  

https://www.understood.org/en/learning-attention-issues/child-learning-disabilities/executive-functioning-issues/key-executive-functioning-skills-explained