CHICAGO, Jan. 8 (Xinhua) -- Children as young as five already have distinct emotional reactions to spending and saving money, and these translate into actual, real-life spending behaviors, a study of the University of Michigan (UM) found.
In the study, UM researchers created a Spendthrift-Tightwad Scale for Children, and asked 225 kids various questions about their emotional response to saving and spending.
Children were oriented along the scale based on their answers, and then researchers examined whether these emotional reactions translated into actual spending behavior when at the end of the study by giving kids a dollar to spend on toys or save.
Kids on the spendthrift end were more likely to buy and tightwad kids were more likely to save. Parents independently provided data on their child's reactions to spending and saving, and these verified the accuracy of the child's self-reports.
"We showed that, in 5-to-10-year-olds, one's emotional response to spending and saving is a useful predictor of what you do with your money," said study lead author Craig Smith, research investigator at the UM Center for Human Growth and Development.
Even if spendthrift-leaning children weren't crazy about an item, they were still more likely to buy it anyway.
"This is similar to adults, in that beyond how much they like the item, their emotional orientation towards spending and saving uniquely predicted if they spent or saved," Smith said.
Four times as many children were classified as tightwads than spendthrifts, which also holds true for adults.
Meanwhile, parents completed the adult version of the tightwad-spendthrift scale, and researchers didn't find any significant relationship between a parent and their child's placement on the scale. A study is under way to test this connection more carefully.
In the last decade, financial literacy classes in which younger kids learn about checking and savings accounts and the value of money and goods have grown in popularity. If spendthrift kids were identified early, special interventions could help them learn to think about the negative consequences of overspending.
The study is scheduled to appear in the Journal of Behavioral Decision Making.
