Teaching Strong Financial Habits To Children

I Can Show You Better Than I Can Tell You

“I’d rather see a sermon than hear one any day; I’d rather one should walk with me than merely tell the way.” is the beginning of the poem “Sermons We See” by Edgar Guest that exemplifies what I believe to be an under appreciated aspect in building black wealth, early lessons and examples to emulate. financial lessons can shape our relationship with money for decades. Research by Vygotsky’s (1978) Sociocultural Theory, show us that learning is deeply influenced by social interactions, indicating that children gain financial knowledge through guided engagement with adults and peers, and children absorb those behaviors into adulthood. For youth in minority and economically disadvantaged communities, these early influences can determine whether they grow up perpetuating a cycle of living with financial struggles or building the foundation for lasting economic abundance.

_{The Psychology of Starting Early}

Children often learn about money “by observing what you do.” They are sponges that internalize their parents views and feelings about everything, including money. They observe things like how parents handle grocery budgets and whether older siblings invest in small ventures. These experiences profoundly impact risk tolerance and confidence later in life. When these early encounters are positive such as learning to save their allowance or discussing the benefits of long-term investing, kids tend to develop healthier money habits as adults. On the flip side, witnessing only stress, negativity, or uncertainty around money can cause of a fear of investing or avoidance of financial planning.

Let’s give an example. Imagine Aisha, a 10-year-old who participates in a fun classroom stock market game. Over several weeks, she tracks pretend investments, sees the value go up and down, and learns that ups and downs are natural. Studies show that “high school students who play a stock market game are significantly more financially literate than those who do not” . By the time Aisha reaches high school, she’s more likely to feel comfortable opening a real investment account or contributing to her savings, a valuable habits, that could last a lifetime. And when factoring in the compounding nature of investing, these lessons can influence the wealth of an entire generation of a family.

The Barriers Facing Minority Communities

Despite the proven benefits of early financial education, stark disparities persist. A St. Louis Fed study found that “24% of white households reported owning stock or mutual funds” while “less than 8% of Black households” did the same. The Brookings Institute (2020) reports several factors contributing to this gap:

• Limited Access to Financial Services – Some neighborhoods lack nearby banks or credit unions, making it challenging to open even a basic savings account. There is also a lack of trust around of service when these instituitions are available
• Lack of Exposure to Investing – If children never see relatives or neighbors invest, they may view the stock market as off-limits, too risky, or equate it to less risky methods wealth creation.
• Scarcity Mindset – Generations of financial instability, often fueled by systemic inequities, can lead to a focus on immediate needs over long-term planning.

Beyond personal finances, there are broader societal implications. According to a report from the New York City Department of Health , “measuring wealth should be as core a public health function as measuring income.” This underscores how a persistent wealth gap directly influences community well-being, from access to housing and education to overall mental health.

Why Family and Community Engagement Matters

Family and community environments are often the bedrock of a child’s financial education. Xiao (2016) shows that kids whose parents routinely discuss money are twice as likely to develop regular saving habits. These candid conversations not only impart functional knowledge, like how to balance a budget, but also creates and encourages a more confident, less anxious mindset toward money. This is why at Aces Advisors Wealth Management, when working with families with young children, we encourage:

• Open Dialogue – Its not about just asking them “ Do you have Mcdonalds money?” when they ask for items outside of your spending priortiies. Normalizing conversations about spending, saving, and investing, teaching them what it means to have trade offs with what they want know and what they want in the long run helps children view money as a resource to be managed rather than feared.
• Hands-On Learning – Activities like stock market simulations or community-based social savings programs like “Partners, Soo Soos, and Hands” that are prominent in historically unbanked communities, are ways to let children have more real world exposure. This allows kids see real-world outcomes from their decisions. This practical exposure makes abstract concepts more tangible, and makes long lasting positive impressions..
• Culturally Relevant Examples – Drawing from success stories that are away from the hyper glamorized paths to wealth in the black community, such as entrepreneurs, executives, and professionals.This allows children to be more consitently inspired by showing that wealth-building is achievable, regardless of what they deem their talents to be, you do not need to be a world class athlete or entertainer to build substanstial wealth.

Evidence-Based Strategies for Early Incorporation

Researchers like Gardynia and Syaodih (2023) emphasize the importance of acting early. Interventions before middle school can yield remarkable results, including higher rates of investment account ownership and improved confidence in financial decision-making. The research further reinforce that consistent financial education leads to greater participation in stock markets and retirement plans later in life. So it is important to :

• Start Before Age 12 – Introducing basic concepts, like compound interest or saving 10% of any income for the long term, establishes a framework children can carry into adolescence and beyond.
• Engage Parents and Guardians – Teaching the entire family ensures that lessons aren’t lost once a workshop or class ends. Parents who understand budgeting or basic investing reinforce these skills at home, creating a long lasting effect.
• Use Practical Tools – Whether it’s a custodial investment account with small monthly deposits or a stock market game in the classroom, hands-on practice normailizes financial concepts and complex ideas. Such experiential learning is linked to significantly higher financial literacy.
• Address Systemic Barriers – Meaningful change requires more than individual education. Improving access to financial institutions and offering community-based resources—like bilingual workshops—can remove obstacles that minority families frequently face.

Family Matters: A Case for Community Action

Many local organizations have stepped in to bridge gaps in financial education. Aces Advisors lead by Financial Advisor Andre Jean-Pierre, is one such example, partnering with schools and community centers to host interactive workshops that tackle both the technical and emotional sides of money management. By providing relatable examples and inviting families to learn together, these initiatives normalize conversations around investing and encourage even modest beginnings.

The Long-Term Impact: Closing Wealth Gaps

Comprehensive education and community-level involvement can narrow the racial wealth gap. Over time, early exposure to investing can spur higher rates of homeownership, entrepreneurial ventures, and college savings, a holistic improvement in economic mobility.

• More Household Participation in Stock Markets: As children grow comfortable with investing, the disparity between white and Black households (24% vs. 8% ownership in stocks or mutual funds can shrink.
• Improved Health and Well-Being: When families experience less financial stress, they often see improvements in mental and physical health, echoing the perspective that wealth should be tracked as diligently as income.

Conclusion: A Shared Responsibility for Future Generations

Investing in early financial education goes beyond individual benefit, it’s a community-wide imperative, that will improve the lively hood of entire communities. Children who learn to view money as a tool rather than a source of stress are more likely to save, invest, and break cycles of scarcity. This shift doesn’t happen in isolation; it requires educators, families, community advocates, and local leaders all working in concert.

By introducing stock market simulations, promoting open dialogue at home, and collaborating with organizations like Aces Advisors, which spearhead hands-on programs in underserved areas, communities can tackle deeply rooted inequalities. As more young people grow up with confidence in their financial abilities, the ripple effect can be enormous: stronger households, more resilient neighborhoods, and a shrinking wealth gap that benefits everyone. Another line we can learn from the poem “Sermons We See” is that “The eye’s a better pupil and more willing than the ear, fine counsel is confusing, but example’s always clear”; lets set the example with our education, leadership, and positive example today that allow the next generation to build with less barriers on the way to propserity !