Children’s money habits ‘formed by age of seven’

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MOST children’s money habits have been formed by the time they reach seven years old, research from a Government-backed body found this week.

The Money Advice Service (MAS) urged parents not to underestimate the influence that the good and bad ways in which they handle their finances have on their young offspring.

It published a report compiled by behaviour experts at Cambridge University, which found that most seven-year-olds have already grasped how to count out money and know that it is used to buy goods. They have also worked out what it means to earn money and what an income is.

Most seven-year-old children in the UK are also capable of planning ahead, delaying a decision and understanding that some choices cannot be reversed, although they do not yet understand the difference between “luxuries” and “necessities”, the study found.

The MAS was set up by the Government in 2010 as an independent service to give people free money advice. It is funded by a levy on the financial services industry.

It said helping people to manage their money better is at the heart of its business plan this year and the report was commissioned to give it a “deep understanding” of how early habits can impact on financial capability in later life. It plans to use the study in its work with other bodies such as financial education charities and look at ways to improve services that could help develop a child’s money skills.