*The following is excerpted from an online article posted on PsychCentral.
While financial education stresses the importance of earning and saving, new research shows that one of the most valuable lessons parents can teach their children about money is how to appropriately give it away.
Led by University of Arizona researcher Ashley LeBaron, the study looks at how financial-giving habits are passed down through generations, and how early life lessons in giving may contribute to personal and financial well-being later on.
Existing research has established that children learn more about finances from their parents than any other source. In previous work, LeBaron highlighted how important it is for parents to give their children hands-on experience with money, in addition to having discussions with them about money and presenting a good financial example.
But the new study suggests that hands-on experience with giving may be particularly important, according to LeBaron.
For the study, LeBaron’s research team interviewed 115 participants, including college students, parents, and grandparents, about what they learned about money from their parents.
The parents and grandparents also were asked what they taught their children about the topic, ultimately providing a picture of how financial lessons are shared across four generations, according to the researchers.
Participants were not asked to talk about financial giving directly, yet nearly 83 percent of them brought it up as an important part of the financial education they gave or received, the researchers discovered.
Participants described different motivations for teaching their children about giving, including a sense of religious duty, a desire to help others, and a desire to give back.
They generally talked about three different types of giving:
- Charitable donations. This encompasses monetary gifts to religious or charitable organizations.
- Acts of kindness. This includes donations, gifts, or acts of service provided more directly to people in need. Examples might include providing meals for the homeless or purchasing Christmas gifts for neighboring families in need.
- Investments in family. This category encompasses financial decisions made by parents to benefit their children or family. For example, some parents might make financial sacrifices in order to enroll a child in sports or music lessons, or to plan a family vacation.
Teaching kids to give is important for several reasons, LeBaron said.
From a practical standpoint, it can be a good way for children to learn financial basics, like budgeting and saving. For example, some study participants talked about having money jars from a young age, with one jar dedicated to money they would save, another for money they would spend, and one for money they would give.
“If a certain percentage of your money goes toward giving, that’s the start of a budget right there,” LeBaron said.
Lessons in giving may also help set the stage for a happier, healthier future, she said.
“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 said.
The study was published in the Journal of Family and Economic Issues.