Giving Compass' Take:

• This Futurity post explores new research that shows how giving kids experience with money can help prepare them for financial success, responsibility and charity.

• How might this concept work in action? In what ways might we begin this education in our own families?

• Here's more on how to raise generous and giving kids.

Past research has shown that children learn more about finances from their parents than any other source. Studies on “financial socialization” have focused on the example parents set for their children, and what moms and dads directly teach their kids about money. However, a new paper says not to neglect the importance of giving kids hands-on practice managing money.

Parents can give their kids practice with money in a variety of ways. They might:

  • give them a regular allowance;
  • pay them for tasks that go above and beyond their normal chores;
  • reward good grades with cash;
  • or encourage them to save for special purchases or charitable donations.

The specifics don’t really matter, nor does the amount of money, which may vary based on a family’s financial situation, says study author Ashley LeBaron of the University of Arizona.

The important thing is that parents give children hands-on experience with money early, when the stakes are still low.

“If the first time kids use a credit card or have to work or have to save up for something or have a bank account is when they’re on their own, that’s not a good time to be practicing,” says LeBaron, a doctoral student in the Norton School of Family and Consumer Sciences.

Read the full article about how hands-on experience with money can benefit kids by Alexis Blue at Futurity.