Measuring 4, 5 and 6 Year Olds’ Financial Capability: Summary of Workshop Discussion

• Context
• The study
• Key findings
• Points to consider

Context

The Money and Pensions Service (MaPS) wants to better understand how to measure the financial capability and meaningful financial education of children of four, five and six years of age and their primary carers. This more in-depth understanding of what is suitable/possible with this age group will, in turn, inform the Financial Foundations Agenda for Change which is part of the ten-year UK Strategy for Financial Wellbeing.

The National Goal for the Financial Foundations Agenda for Change is that two million more children and young people aged five to seventeen receive a meaningful financial education by 2030. However, at the moment, this National Goal for the entire age range of five- to seventeen-year-olds can only be measured for seven- to seventeen-year-olds.

The goal of this workshop with subject matter experts was to understand what is possible in terms of measuring and recording financial capability and meaningful financial education for children of this age group. This will put MaPS in a better-informed place to design a UK wide research project for the measurement of financial capability for this age group.

The study

Building on previous MaPS research in this area, a range of experts with a wide range of complementary expertise were brought together to discuss:

• What research questions can and should we be asking children in this age group?
• How can and should we be asking our research questions?

This research was carried out by DJS Research.

Key findings

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.

Points to consider

• Methodological strengths/weaknesses: Whilst this workshop discussion is based on participants’ extensive subject knowledge and from the findings of previous similar studies it is limited to the knowledge of this group.
• Generalisability/ transferability: The intention of this work was to inform a UK-wide research project for the measurement of financial capability for this age group. Therefore, it may not be applicable to other countries where the education of different age groups diverges from the UK.
• Relevance: This report is applicable to anyone with an interest in understanding what is possible in terms of measuring and recording financial capability and financial education for children in the 4-6 age range, but also possibly outside of that.