Money Smart Parenting

As parents, we teach our children to tie their shoes, say “please” and “thank you,” and brush their teeth. But how often do we think about teaching them how to manage money — and why it should start early? Turns out, early financial education isn’t just about learning how to save; it’s about shaping their brains, behaviors, and confidence for a lifetime of healthy choices.

Recent studies in developmental psychology and neuroscience reveal that money habits are largely formed by age 6. That’s right — before your child even learns long division, they’ve already internalized how to think and feel about money. So what does early financial literacy really do for a child’s development? Let’s dive into the five science-backed benefits.

• Strengthens Decision-Making Skills

Neuroscience shows that the prefrontal cortex, responsible for planning and decision-making, starts developing rapidly during early childhood. Teaching kids the basics of spending, saving, and delaying gratification trains this brain region like a muscle. Whether they’re choosing between buying one toy today or saving for a bigger one later, they’re literally practicing executive functioning — a skill linked to academic success, emotional regulation, and future independence.

• Builds Long-Term Self-Control

The famous “Marshmallow Test” demonstrated how kids who learned to delay gratification tended to do better in life — from school performance to career satisfaction. Financial education helps kids internalize the value of waiting for a bigger reward. Neuroscientists believe these lessons can rewire reward pathways in the brain, strengthening their ability to manage impulse control not just with money, but across all areas of life.

• Encourages a Healthy Money Mindset

Children observe and absorb money-related attitudes from caregivers — often unconsciously. Teaching them openly about budgeting, earning, and giving helps form positive neural associations with money, rather than anxiety or shame. Dr. Daniel G. Amen, author of Raising Mentally Strong Kids, emphasizes that empowering kids with healthy thinking habits early helps prevent the limiting beliefs that often show up in adulthood.

• Improves Emotional Intelligence

Money is emotional — and kids pick up on that, too. Teaching them about needs vs. wants or how to handle disappointment when they can’t afford something encourages emotional resilience. Neuroscience tells us that this emotional processing happens in the amygdala and is shaped by how adults respond to financial situations. Calm, intentional conversations help build emotional intelligence that extends beyond money.

• Lays the Foundation for Lifelong Habits

When children practice consistent saving, sharing, and spending routines — even with small allowances — they’re wiring their brains for financial habits that stick. Dr. Charles Fay, coauthor of Love and Logic, points out that involving kids in small money decisions from a young age gives them ownership over their choices and the opportunity to learn from failure in a safe environment.

Final Thoughts

Early financial education is more than teaching dollars and cents — it’s about building the brain pathways for confidence, self-regulation, and independence. And the earlier you start, the more natural these skills become. Whether it’s through play, allowance routines, or story-based lessons, each little moment is an investment in your child’s future.So next time you’re counting coins with your little one or talking about saving for a toy, remember: you’re not just teaching them about money — you’re shaping their brain for a lifetime of wise choices.

Want help getting started? Check out our financial literacy storybooks on Amazon, or tune in to the Inked Parenthood Podcast for fun, relatable ways to make money talks a normal (and exciting!) part of family life.