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New study supports teaching money concepts to preschoolers

Credit union Thrive By Five program plants seeds for a lifetime of financial success

Research into how young children learn indicates that they are capable of acquiring basic money concepts long before they enter school. Through social interaction and observation, preschoolers can begin to comprehend such abstractions as the purpose of money.

That's one of the key conclusions of phase one of the University of Wisconsin (UW)-Madison study into preschool financial literacy. The Credit Union National Association (CUNA) developed the concept and offered advice for the study, and a grant from the National Credit Union Foundation funded the research.

Parents who guide their preschoolers in learning about money and saving obviously won't create toddler Warren Buffets. "However, it is generally recognized that very young children can be taught about the basic benefits and tools of sharing, savings, and purchase that will support good financial habits and practices as children, leading to better managed financial lives as adult, independent spenders and savers," the report said.

In praising the study, CUNA President/CEO Dan Mica pointed out that full family membership policies put credit unions in a unique position to capitalize on this insight.

Thrive By Five"Four years ago, we created our Thrive by 5 teaching resource for parents on the hunch that it could help them explain and model smart spending and saving to their children from a very early age. This report says that we were right to push the financial literacy envelope below kindergarten," Mica said.

"As the study moves forward, I expect that we'll find out exactly what kinds of activities work best with this age group. With that knowledge we can improve Thrive by 5 if necessary, and give credit unions a tool for parents to better encourage healthy attitudes about money in their children before they begin school. The long-term result will be more financially secure adult members," Mica added.

The research was led by Karen C. Holden, Ph.D., professor in the UW's Department of Consumer Science, and Charles W. Kalish, Ph.D., chair of the UW's Department of Educational Psychology, with assistance from graduate students Laura Scheinholz, Deanna Dietrich, and Beatriz Novak.

In the first phase of the planned three-year study, they reviewed dozens of previously unconnected studies of the development of economic concepts in early childhood.

"The literature in cognitive development provides support for the proposition that financial literacy education is appropriate for young (preschool-aged) children. Children are already engaged in thinking about, and acting within, a financial environment. The conceptual tools they develop in their everyday lives will be the starting point for any formal educational efforts," they concluded.

The research team also examined 28 U.S. and 45 international programs to identify "the key financial concepts that are targeted in the financial education programs aimed at young children." It found little evidence that these programs considered "the cognitive ability of children to grasp those concepts." Furthermore, the researchers said, "There has been virtually no rigorous evaluation of these programs."

Future phases of the research will attempt to rectify these shortcomings by determining the most age-appropriate educational outcomes for preschool financial education and testing which methods and activities work best in preschool classrooms and in the home, starting with CUNA's Thrive by 5.

“I want to commend the credit unions for stepping up to the plate.” - State Senator Lance Mason

“The educational tools of MoneyAndStuff will keep students from getting into a personal financial crisis.” - State Senator Tom Sawyer

“Ohio’s credit unions, teachers, and maybe more importantly parents, are taking on this initiative to make a difference in people’s lives.” - State Senator Tom Sawyer

“I support your efforts. [Financial education] is an area that needs a lot more effort than it is currently getting.” - State Senator Dale Miller

“I want to thank the Ohio Credit Union League and Ohio credit unions for extending their hand to educators, students, parents, and legislators by creating MoneyAndStuff.” - State Representative Ron Gerberry

“MoneyAndStuff is so critically important for not only the students, but also the parents. It’s a great resource. I will be talking about it wherever I go.” - State Senator Theresa Fedor

“Financial education in every school has been needed for a long, long time. What you (credit unions) are about here is good for America.” - Congresswoman Marcy Kaptur

“I hope every child has a real account in a credit union or a virtual account.” - Congresswoman Marcy Kaptur

“It’s not how much you make, it’s how much you save.” - Congresswoman Marcy Kaptur

“My hat is off to the credit unions for doing this.” - Congressman Steve Chabot

“As a former teacher, I particularly like the effort to reach out to parents and educators.” - Congressman Steve Chabot

“It makes good sense that you are trying to get to kids at a very young age, so my hat is off to all of you.” - Congressman Steve Chabot

“ is just fantastic. I can’t wait to let my kids get on that site! It will be a great help in shaping our future for kids.” - Teacher Sandy Carter

“I was so excited when I first learned about the MoneyAndStuff Web site that I was on it until 2:00 a.m. And it was a school night!” - Teacher Sandy Carter

“This is a wonderful Web site. We look forward to using it here at our school.” - Assistant Principal Lin Yates