Measuring 4, 5 and 6 year olds’ financial capability: summary of workshop discussion

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To help support UK Strategy for Financial Wellbeing goal of two million more children and young people receiving a meaningful financial education by 2030, the Money and Pensions Service (MaPS) facilitated a workshop with subject matter experts to explore how the financial capability of 4, 5 and 6 year olds and their carers can be measured.

We know that children start to learn vital money skills and habits between the ages of three and seven. Yet there is little understanding on how to measure ‘meaningful financial education’ for this age group. Building on previous MaPS research in this area, a range of experts were brought together to discuss:

  • What research questions can and should we be asking children in this age group? (The ‘what’).
  • How can and should we be asking our research questions? (The ‘how’).

This report is a summary of this discussion held on 8 March 2021. Several key learning points emerged on both the ‘what’ and the ‘how’ questions. The discussion will inform MaPS’ next steps in the measurement of financial capability for this age group.

Discussion highlights

There is a need to understand young children’s development more broadly. 

  • It is hard to separate the values and beliefs of the child from those of the parent at this age.
  • Confidence and self-efficacy play a part both in how children behave around money and also in how they respond to questions.
  • Personality, including whether a child is present or future oriented, how they emotionally relate to gain or loss, influences how they will think and behave around money.
  • A child’s style of attachment has an impact on their relationship with money.
  • Understanding how the parents or carers’ locus of control may be reflected in how they talk to or teach children about money management is important.

Financial capability is not just about money. Children can understand economic concepts without understanding money. 

  • Think more widely about rewards, give and take, borrowing and other actions that children are involved in on a regular basis through other contexts.
  • Separate numeracy from money for children of this age and to simplify questioning more generally to only ask about one aspect in each question.
  • Observe play and use other data collection methods which can help us to understand how children are putting these different ideas together (rather than asking direct questions).

We cannot understand financial capability in young children without considering their financial socialisation and their early childhood consumer experiences.

  • That also means we need to be mindful about such things as the socio-economic and cultural background of the family and what the society becoming more cashless and digital may mean for children’s experiences of money.