The Future

Teaching Children About Investing

At what age are children capable of understanding financial concepts such as the value and purpose of money?

According to academic research dating back more than 70 years and pioneered by Jean Piaget, children are quite capable of understanding what money is, and for what it can be used, at a very early age. This research has been debated in academic literature for decades, and supported by many researchers subsequently. To understand what a child is capable of comprehending, academicians break a child’s financial understanding into four distinct stages: At age four to five, a child understands that money can purchase any object; at age five to six, that the amount of money to be used must exactly match an object’s price; in a range of ages between three and six, that he can pay with money greater than the price of the object; and at age seven to ten, full understanding of all of these concepts is achieved. At this point, the child understands fully what “change” is, as a result of a transaction.


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