September 2016

Building blocks to help 

youth achieve financial 

capability

Report brief
1 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

Table of contents

Table of contents......................................................................................................... 1

1. Introduction........................................................................................................... 3

2. What are the building blocks of financial capability? ....................................... 5

3. When do children typically acquire the building blocks of 

financial capability? ............................................................................................. 8

4. What are the building block competencies for each 

developmental stage?........................................................................................ 10

4.1 Early childhood (ages 3−5): Executive function develops rapidly, and 

very early financial knowledge and norms begin to form...................... 11

4.2 Middle childhood (ages 6−12): Financial habits and norms are readily 

acquired, and executive function continues to develop ......................... 13

4.3 Teens and young adults (ages 13−21): Independent financial decisionmaking increases, and executive function continues to mature ............ 15

4.4 Youth capability milestones .................................................................... 16

5. Recommendations for applying the financial capability 

developmental model ......................................................................................... 19

5.1 Recommendation one: For children in early childhood, focus on 

developing executive function skills ...................................................... 20

5.2 Recommendation two: Help parents and caregivers to more actively 

influence their child’s financial socialization .........................................21
2 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

5.3 Recommendation three: Provide children and youth with experiential 

learning opportunities ........................................................................... 22

5.4 Recommendation four: Teach youth financial research skills ............. 22

6. How can you incorporate the developmental model in your work? .............. 24

7. Conclusion .......................................................................................................... 25
3 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

1. Introduction

To navigate the financial marketplace effectively, adults need financial knowledge and skills, 

access to resources, and the capacity to apply their money skills and habits to financial 

decisions. Where and when during childhood and adolescence do people acquire the 

foundations of financial capability? The Consumer Financial Protection Bureau (CFPB) 

researched the childhood origins of financial capability and well-being to identify those roots 

and to find promising practices and strategies to support their development.

The report discussed in this brief, “Building blocks to help youth achieve financial capability: A 

new model and recommendations,” illuminates critical attributes, abilities, and opportunities 

acquired during the years spanning preschool through young adulthood that support the 

development of adult financial capability. By uncovering critical intersection points between 

youth development and financial capability, the CFPB answers the questions of “how,” “when,” 

and “where” children and youth typically acquire critical building blocks of financial capability –

building blocks that can provide a foundation to support financial well-being in adulthood.1

The research led to the creation of a developmentally informed, skills-based model.2 The many 

organizations and policy leaders working to help the next generation become capable of 

 

1 Financial well-being: The goal of financial education, Consumer Financial Protection Bureau (2015), available at

consumerfinance.gov/reports/financial-well-being/.

2 The research described in this report was conducted by the Corporation for Enterprise Development (CFED), under 

contract to CFPB. CFED’s research team also included academic experts in financial capability and educational and 

developmental psychology from the University of Wisconsin–Madison and the University of Maryland, Baltimore 

County, as well as ICF International.
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achieving financial capability can use this new model to shape priorities and strategies. 

The financial capability developmental model can be used to:

§ Refine existing programs and financial education resources.

§ Develop and test new and innovative financial education strategies.

This brief also outlines recommendations the CFPB created from its research to help those 

seeking new ideas and insights for delivering evidence-based, age-appropriate, and 

developmentally appropriate financial education policies and programs.
5 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

2. What are the building blocks 

of financial capability?

CFPB-commissioned research found that adult financial capability most likely stems from three 

interlocking youth developmental building blocks:

§ Executive function – a set of cognitive processes used to plan, focus attention, 

remember information, and juggle multiple tasks successfully.

§ Financial habits and norms – the values, standards, routine practices, and rules of 

thumb used to routinely navigate day-to-day financial life.3

§ Financial knowledge and decision-making skills – familiarity with financial facts 

and concepts, and the ability to do financial research and make conscious and 

intentional financial choices.

To illustrate and explain how, when, and where children and youth typically acquire these 

building blocks, the CFPB created the financial capability developmental model. By applying 

this model, program developers, financial education providers, and policy and community 

leaders can help better prepare individuals for a lifetime of financial capability and enhanced 

financial well-being.

 

3 Rules of thumb are automatic, “go-to” responses people have to particular environmental cues that simplify the 

decision-making process and yield a reliably “good enough” solution. Also called cognitive heuristics, rules of thumb 

are mental shortcuts people use to quickly make decisions or resolve challenges when we have limited information.
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The CFPB’s new research confirms the importance of starting financial education early and 

continuing to build on that foundation throughout the K-12 school years, and of financial 

education for high schoolers.4 The research suggests that explicit personal finance instruction is 

just one of the building blocks of financial capability and is only likely to be successful if the 

person acquires the other building blocks along the way. It is important to recognize that not all 

children encounter opportunities to develop these building blocks fully. Therefore, families, 

community organizations, and schools are important platforms5 for advancing these various 

building blocks. Because no one platform alone can help children acquire all three building 

blocks, we must work together and be intentional about creating the conditions that give all 

children and youth opportunities to build strong foundations for achieving adult financial wellbeing.

The recommendations derived from this research provide a set of common strategies for 

financial education program developers, parents, schools, and policy and community leaders 

seeking new ideas and insights as they create and deliver evidence-based, age-appropriate, and 

developmentally appropriate financial education policy initiatives and programs. To learn more, 

you can download the full report, “Building blocks to help youth achieve financial capability: A 

new model and recommendations,” online at: 

http://files.consumerfinance.gov/f/documents/092016_cfpb_BuildingBlocksReport_ModelAn

dRecommendations.pdf.

 

4 Transforming the Financial Lives of a Generation of Young Americans: Policy Recommendations for Advancing

K-12 Financial Education, Consumer Financial Protection Bureau (2013), available at

files.consumerfinance.gov/f/201304_cfpb_OFE-Policy-White-Paper-Final.pdf.

5 Platforms are the locations or settings where youth engage in activities to develop and reinforce financial capability 

attributes and abilities. Major platforms include home, schools, and programs run by community organizations.
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Table 1, below, provides a summary of each of the building blocks and illustrates how it 

contributes to financial capability in adulthood.

TABLE 1: THREE YOUTH BUILDING BLOCKS OF FINANCIAL CAPABILITY

Executive 

function

Financial habits and 

norms

Financial knowledge 

and decision-making 

skills

What it is

Self-control, working 

memory,6 problemsolving

Healthy money habits, 

norms, rules of thumb

Factual knowledge, 

research and analysis 

skills

What it supports 

in adulthood

Future orientation,7

perseverance, planning 

and goal setting, 

general cognitive 

flexibility8

Decision shortcuts9 for 

navigating day-to-day 

financial life and 

effective routine money 

management

Deliberate financial 

decision-making 

strategies, like financial 

planning, research, and 

intentional decisions

Examples 

of financial 

application in 

adulthood

Saving, setting financial 

goals, developing and 

executing budgets

Having a system to pay 

bills on time

Effective comparison 

shopping

 

6 Working memory is the ability to hold onto and process several pieces of information at once. In the context of 

building blocks of financial capability, it is used in executive function when we briefly store and recall information 

to compare options and make decisions.

7 Future orientation is having a long-term outlook and believing that there will be opportunities for you in the years 

ahead.

8 Cognitive flexibility is the ability to think of different ways to solve a problem. It is a component of executive 

function that allows us to think creatively to address unexpected challenges.

9 Decision shortcuts are routine responses we use to quickly make decisions or resolve challenges when we have 

limited information. 
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3. When do children typically 

acquire the building blocks 

of financial capability?

How children learn and what they are able to master evolves as they enter different 

developmental stages. They acquire the building blocks of financial capability throughout 

childhood and into young adulthood.

The financial capability developmental model is an age-appropriate framework that 

incorporates financial capability skills, knowledge, and thought processes. This framework can 

be applied in designing programs and strategies that serve children and youth. The model 

identifies three key building blocks – executive function, financial habits and norms, and 

financial knowledge and decision-making skills. It then lays out when these three building 

blocks of financial capability typically manifest, as well as how they commonly progress during 

three developmental stages – early childhood, middle childhood, and from the teen years into 

young adulthood.

It is important to view the building blocks of financial capability as ideal windows of opportunity 

to learn key skills during specific developmental periods and to understand that these are not 

the only opportunities for a person to acquire the building blocks. Individual experiences play a 

large role in child and youth development. External factors, such as socioeconomic 

circumstances, limited access to a wide range of economic opportunities, and early experiences 

with adversity, can limit opportunities to acquire (or interfere with the acquisition of) the 

building blocks of financial capability. For example, even motivated and skilled youth need 

external opportunities and supports if they are to put their financial knowledge and money 

habits to use.
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To close gaps in a young person’s development, schools, families, and community programs are 

essential. By recognizing and addressing each of the building blocks, we can give all children 

opportunities to acquire the building blocks that create a foundation for adult financial 

capability and well-being.

Table 2, below, shows the typical progression of when children, teens, and young adults acquire 

the building blocks of financial capability.

TABLE 2: PRIMARY DEVELOPMENTAL STAGES WHEN CHILDREN TYPICALLY ACQUIRE THE BUILDING 

BLOCKS OF FINANCIAL CAPABILITY
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4. What are the building block 

competencies for each 

developmental stage?

Children begin acquiring the building blocks of financial capability as early as preschool and 

continue to do so throughout young adulthood. This brief discusses the role of each building 

block of financial capability and the youth developmental stages at which it manifests and 

matures. This knowledge can help program providers, communities, and policy leaders apply 

the building blocks model as they develop personal finance programs.

The research identified three developmental stages during which cognitive and environmental 

factors combine to create ideal touch points and learning conditions. These touch points are 

periods during which individuals are typically developmentally capable of learning a skill or 

attitude and are most commonly open to learning it. The cognitive and environmental factors 

that together make a particular age ideal for absorbing a certain skill or behavior might not 

readily reappear again later in life, making these capabilities not nearly so easy to learn outside 

the window.

Turning now to each developmental stage, the next section of this brief identifies which primary 

building blocks of financial capability children and youth acquire during each of the three 

developmental stages. The ages provided are general guides and not exact, fixed ages at which a 

developmental window opens and closes.
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For each developmental stage, the report identifies the pathways10 (processes and experiences) 

and platforms (locations) where children typically acquire a building block of financial 

capability.

4.1 Early childhood (ages 3−5): Executive 

function develops rapidly, and very early 

financial knowledge and norms begin to 

form

Executive function is the primary building block acquired during early childhood. We use 

executive function when we make plans, defer gratification, focus attention, remember 

information, and juggle multiple tasks. These cognitive abilities support impulse control and 

future-oriented skills, which in turn provide a foundation for performing adult financial tasks 

such as setting financial goals, saving, and managing a budget.11, 12

Very young children also begin to develop basic cognitive abilities they will use in later years as 

they acquire financial knowledge and skills, as well as some early financial values and norms. 

Children as young as 3−5 years old can develop extremely rudimentary knowledge and skills 

 

10 Pathways are the processes and experiences through which youth gain and develop the building blocks of financial 

capability. Major pathways include early experiences and environment; parental influence; financial socialization; 

experiential learning; and direct, explicit instruction.

11 Moffitt, Terrie E., Louise Arseneault, Daniel Belsky, Nigel Dickson, Robert J. Hancox, HonaLee Harrington, Renate 

Houts, Richie Poulton, Brent W. Roberts, Stephen Ross, Malcom R. Sears, W. Murray Thomson, and Avshalom 

Caspi, A gradient of childhood self-control predicts health, wealth, and public safety, 108(7) Proceedings of the 

National Academy of Sciences 2693–2698 (2011).

12 Lynch Jr., J. G., Netemeyer, R. G., Spiller, S. A., and A. Zammit, A Generalizable Scale of Propensity to Plan: The 

Long and the Short of Planning for Time and for Money, 37(1) Journal of Consumer Research 108–128 (2010).
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such as basic numeracy, which support personal financial management later in life.13, 14

Table 3, below, summarizes the primary and secondary elements of financial capability that 

develop during early childhood. 

TABLE 3: WHAT HAPPENS IN EARLY CHILDHOOD (AGES 3−5)

Primary

Executive function develops

§ Supports future-oriented behaviors

§ Provides cognitive basis for financial reasoning skills

§ Supports self-control and perseverance

§ Forms a foundation for ability to follow through

Secondary

Basic numeracy develops

§ Provides the foundation for applied math skills

§ Is integral to skillful money management

§ Is integral to financial analysis skills

Financial attitudes begin to develop

§ Examples: future orientation and delayed gratification15

§ Support ongoing development of executive function and later-in-life financial skills

 

13 Holden, Karen, Charles Kalish, Laura Scheinholtz, Deanna Dietrich, and Beatriz Novak, Financial Literacy 

Programs Targeted on Pre-School Children: Development and Evaluation, La Follete School Working Papers

(2009), available at http://digital.library.wisc.edu/1793/36314.

14 Whitebread, David, and Sue Bingham, Habit Formation and Learning in Young Children (London: Money Advice 

Service 2013).

15 Delayed gratification is the willingness to forgo or postpone an immediate reward or benefit in favor of a future 

benefit. Along with a future orientation and impulse control, it supports self-regulation.
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How it happens: pathways and platforms

§ Children learn through observation; direct, explicit instruction; and practice.

§ Home, day care, or preschool are the most common platforms.

§ Parents and other caregivers have the most influence.

4.2 Middle childhood (ages 6−12): Financial 

habits and norms are readily acquired, 

and executive function continues to 

develop

The primary building block of financial capability that children typically acquire during middle 

childhood is financial habits and norms. These are a set of values, attitudes, standards, beliefs, 

and social norms about money. These beliefs will influence a majority of their financial 

behaviors and habits as adults.16 During this stage, children continue to develop executive 

function and related skills such as impulse control and self-regulation.17 Through the process of 

financial socialization,18 they also pick up basic financial norms and habits, which they will use 

to make financial decisions as adults. Their continued cognitive and social development helps 

them interpret and analyze experiences that contribute to the development of their financial 

attitudes and habits. At this stage, children usually begin to grasp abstract concepts that 

 

16 Danes, Sharon M., Parental Perceptions of Children’s Financial Socialization, 5 Journal of Financial Counseling 

and Planning 127–146 (1994).

17 Self-regulation, in the context of financial capability, is the ability to understand and control impulses, behavior, 

feelings, and thoughts in financial situations, and to respond wisely when facing financial challenges, for example, 

by persevering, or by delaying gratification.

18 Financial socialization occurs when youth pick up financial attitudes, habits, and norms from observing financial 

behaviors of parents, caregivers, peers, educators, media, or other influencers.
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underpin personal finance, such as saving for a future purchase. During this developmental 

stage, youth are more fully able to contemplate the future and can conceptualize the timing of 

things happening months away.19, 20

Table 4, below, summarizes the primary and secondary elements of financial capability that 

develop during middle childhood.

TABLE 4: WHAT HAPPENS IN MIDDLE CHILDHOOD (AGES 6−12)

Primary

Financial habits and norms develop

§ Frugality versus materialism

§ Value of saving and planning ahead

§ Reliance on own values when making spending decisions

Financial self-confidence (financial self-efficacy21) grows

§ Gaining experience managing resources

§ Developing attitudes toward financial institutions

Secondary

Executive function continues to develop

§ Supports financial analysis skills, planning and goal setting, conscientiousness, and grit

Applied math and basic financial skills develop

§ Helps money management

§ Helps financial knowledge

 

19 Scheinholtz, Laura, Karen Holden, and Charles Kalish, Cognitive Development and Children’s Understanding of 

Personal Finance, Consumer Knowledge and Financial Decisions: Lifespan Perspectives 29–47 (New York: 

Springer 2012).

20 Whitebread, David, and Sue Bingham, Habit Formation and Learning in Young Children (London: Money Advice 

Service 2013).

21 Financial self-efficacy is confidence in one’s ability to manage finances and achieve financial goals without being 

overwhelmed, such as sticking to a spending plan.
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How it happens: pathways and platforms

§ Financial socialization22

§ Home is still most important, but community, media, peers, and school gain influence

§ Implicit learning dominates, but explicit learning opportunities increase

4.3 Teens and young adults (ages 13−21): 

Independent financial decision-making 

increases, and executive function 

continues to mature

Financial knowledge and decision-making skills are the building blocks of financial capability 

that come into focus during adolescence and young adulthood. As youth start making 

consequential financial decisions, learning about personal financial management becomes 

personally relevant for the first time. During the teen years, cognitive faculties, such as 

information processing and memory, continue to strengthen. This enables teens and young 

adults to practice financial research and decision-making skills. 

Meanwhile, executive function continues to mature. Therefore, adolescents may display adultlevel cognition in some settings, yet still lack impulse control, especially during highly emotional 

situations. Increasing interaction with the financial world and financial decision-making during 

these years allows teens to gain the familiarity with basic financial decision-making strategies, 

and further develop the routine habits and attitudes that they will rely upon to navigate their 

day-to-day financial lives as adults.

 

22 Financial socialization occurs when youth pick up financial attitudes, habits, and norms from observing financial 

behaviors of parents, caregivers, peers, educators, media, or other influencers.
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Table 5, below, summarizes the primary and secondary elements of financial capability that 

develop during adolescence and young adulthood.

TABLE 5: WHAT HAPPENS IN ADOLESCENCE AND YOUNG ADULTHOOD (AGES 13−21) 

Primary

Financial knowledge and decision-making skills grow as they become more personally relevant

§ Knowledge and skills are strengthened through making and reflecting on 

consequential decisions

§ Support deliberate, intentional problem-solving

Secondary

Executive function continues to develop

§ Supports critical thinking, focus, and perseverance

Financial habits and norms continue to develop

§ Shortcuts for automating financial decisions crystallize with repeated experience

§ Habits and attitudes for managing money become part of individual identity

How it happens: pathways and platforms

§ Schools, formal instruction

§ Structured experiential learning23 activities

§ Real-life financial decisions, ideally guided by adult oversight

4.4 Youth capability milestones

The following table summarizes capability milestones at different developmental stages for the 

three financial capability building blocks. It also shows the adult financial behaviors and 

 

23 Experiential learning is the process of deriving meaning from direct or hands-on experiences. Experiential 

learning opportunities encourage children and youth to take initiative, make decisions, experience the results of 

their choices in a safe environment, and learn through reflection.
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characteristics related to financial well-being supported by each of the three building blocks of 

financial capability. This is not a description of what is necessarily typical for all children in 

these age ranges. Rather, it provides information on the abilities and attributes that a young 

person would have in a best-case scenario, as a way to conceptualize the potential outcome goals 

of youth financial education programming.

TABLE 6: SUMMARY OF YOUTH CAPABILITY MILESTONES AND THEIR RELATIONSHIP TO ADULT 

OUTCOMES

Executive function Financial habits and norms Financial knowledge and

decision-making skills

Early 

childhood

(ages 3−5)

§ Begins to 

demonstrate selfregulation, 

persistence, and 

focus

§ Can use these 

qualities when using 

and managing 

limited resources 

like time, money, 

treats, or 

belongings

§ Has begun to develop basic 

values and attitudes around 

keeping (saving) and using 

(consuming) resources 

§ Has early numeracy 

skills like counting and 

sorting

§ Grasps very basic 

financial concepts like 

money and trading

Middle 

childhood 

(ages 6−12)

§ Shows the ability to 

plan ahead and 

delay gratification

§ Shows future 

orientation

§ Has begun to develop a 

positive attitude toward 

planning, saving, frugality, 

and self-control

§ Has begun to show positive 

financial habits, like 

planning and saving

§ Can make spending and 

saving decisions aligned 

with his or her goals and 

values

§ Is self-confident about 

completing age-appropriate 

financial tasks

§ Understands core 

basic financial 

concepts and 

processes

§ Has successfully 

managed money or 

other resources to 

reach his or her own 

goals
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Executive function Financial habits and norms Financial knowledge and

decision-making skills

Adolescence 

and young 

adulthood 

(ages 

13−21)

§ Demonstrates 

critical-thinking 

skills

§ Demonstrates 

future orientation

§ Demonstrates the 

ability to plan 

ahead and delay 

gratification

§ Has a positive attitude 

toward planning, saving, 

frugality, and self-control

§ Shows positive money 

management habits and 

decision-making strategies

§ Can make spending and 

saving decisions aligned 

with his or her goals and 

values

§ Is self-confident about 

completing age-appropriate 

financial tasks

§ Grasps advanced 

financial processes and 

concepts

§ Can successfully 

manage money or 

other resources to 

reach his or her own 

goals

§ Can identify trusted 

sources of financial 

information and 

accurately process that 

information

Adult 

capabilities 

§ Sets goals and 

makes concrete

plans to meet them

§ Can control 

impulses and think 

creatively to 

address 

unexpected 

challenges

§ Completes tasks 

set for oneself, 

perseveres in the 

face of obstacles

§ Makes financial decisions 

in light of his or her own 

standards rather than in 

comparison to other people 

(i.e., has internal frame of 

reference)

§ Believes in his or her own 

ability to manage money 

and achieve financial goals 

(i.e., has financial selfefficacy)

§ Has effective routine 

money management habits 

§ Knows when to seek 

out, and where to find, 

reliable information to 

make a financial 

decision

§ Knows how to process 

financial information to 

make sound financial 

decisions

§ Knows how to execute 

financial decisions, 

including monitoring 

and adapting as 

necessary to stay on 

track

§ Follows through on 

financial decisions
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5. Recommendations for 

applying the financial 

capability developmental 

model

The CFPB continues to stress the importance of introducing key financial education concepts 

early, building on that foundation consistently throughout the K-12 years, and, along the way, 

involving parents and caregivers as partners in preparing children and youth for a lifetime of 

skillful money management.24

The new research presented in this brief finds that explicit personal finance instruction is only 

one of the building blocks of financial capability. To be successful, youth must acquire other 

building blocks along the way to young adulthood. Families, community organizations, and 

schools are important platforms for helping youth acquire these building blocks. Not all children 

have opportunities to develop these building blocks fully because school educators, parents, and 

caregivers may not feel prepared to teach financial education effectively. To address this 

challenge, we must work together to ensure that all children have the opportunity to acquire all 

three of the building blocks to build strong foundations for greater adult financial capability. 

 

24 Transforming the Financial Lives of a Generation of Young Americans: Policy Recommendations for Advancing

K-12 Financial Education, Consumer Financial Protection Bureau (2013), available at

files.consumerfinance.gov/f/201304_cfpb_OFE-Policy-White-Paper-Final.pdf.
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Therefore, the CFPB has developed four recommendations to demonstrate ways to apply the 

developmental model in financial education programs, policies, and initiatives. These 

recommendations reflect financial capability strategies and approaches that research suggests 

are promising opportunities and activities for youth.

Financial education program providers can implement these recommendations in current 

offerings and evaluate their effects. Policy and community leaders can use the recommendations 

to promote developmentally appropriate financial education initiatives.

5.1 Recommendation one: 

For children in early childhood, focus on 

developing executive function skills

Recognizing that executive function skills are critical to achieving financial well-being later in 

life, children should be involved in activities that help them to develop their executive function 

skills, preferably in multiple contexts.25, 26 For example, before a play session, a parent or teacher 

could ask children what toys they plan to use or about an activity they plan to complete. When 

playtime ends, the parent or teacher can ask the children to evaluate how well they stuck to their 

plan. Providing increasingly difficult puzzles or sing-along rhymes also supports executive 

function development.27 These activities do not need to have a financial frame, but using an 

age-appropriate financial context may advance both executive function and financial knowledge. 

Examples of executive function training in financial contexts include make-believe play 

 

25 Klingberg, Torkel, Elisabeth Fernell, Pernille J. Olesen, Mats Johnson, Per Gustafsson, Kerstin Dahlström, 

Christopher G. Gillberg, Hans Forssberg, and Helena Westerberg, Computerized Training of Working Memory in 

Children with ADHD—A Randomized, Controlled Trial, 44(2) Journal of the American Academy of Child and 

Adolescent Psychiatry 177–186 (2005).

26 Lillard, Angeline, and Nicole Else-Quest, Evaluating Montessori Education, 313 Science 1893–1894 (2006). 

27 Diamond, Adele, Executive Functions, 64(1) Annual Review of Psychology 135–168 (2013).
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activities, such as having children act out scenes in which they go to the bank, make a grocery 

list and go shopping, or get paid to run a business or do a job.

Organizations that work with parents can share ideas and encourage parents to do 

age-appropriate activities that involve making resource or financial management decisions such 

as creating a budget or making trade-offs about purchases. The Center on the Developing Child 

at Harvard University provides a number of activities that parents and caregivers can do with 

3- and 5-year-olds to strengthen executive function, including imaginary play, storytelling, 

games and songs, and cooking together.28

5.2 Recommendation two: 

Help parents and caregivers to more 

actively influence their child’s financial 

socialization

Financial socialization is an ongoing process by which children and youth pick up the financial 

attitudes, habits, and norms that guide their financial behaviors as adults.29, 30 Financial 

socialization occurs as children and youth observe the financial behaviors of others. Parents and 

caregivers are the primary influencers of financial socialization in elementary and middle 

school. During the teen and young adult years, peers and media become more influential.

 

28 Executive Function Activities for 3- to 5-year-olds, Center on the Developing Child, Harvard University, available 

at http://developingchild.harvard.edu/wp-content/uploads/2015/05/Executive-Function-Activities-for-3-to-5-

year-olds.pdf.

29 Danes, Sharon M., Parental Perceptions of Children’s Financial Socialization, 5 Financial Counseling and 

Planning 127–146 (1994).

30 Whitebread, David, and Sue Bingham, Habit Formation and Learning in Young Children (London: Money Advice 

Service 2013)
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Youth financial capability programs, as well as policy and community leaders, can help parents 

and caregivers to more actively influence their child’s financial socialization. In the process, 

programs can also build parents’ and caregivers’ confidence in their ability to share healthy 

financial habits and norms. A number of CFPB resources and practical suggestions to support 

parents and caregivers in these efforts are available online at “Money as You Grow” 

(consumerfinance.gov/money-as-you-grow).

5.3 Recommendation three: 

Provide children and youth with 

experiential learning opportunities

Explicit instruction in personal finance should be complemented with experiential learning 

opportunities. During experiential learning, youth derive meaning from direct or hands-on 

experiences. These learning opportunities allow youth to make independent decisions in a safe 

environment and to learn from those firsthand experiences. Providing guidance and 

opportunities for decision-making practice and reflection may help youth better learn and retain 

financial knowledge and skills. Schools and youth programs that offer experiential learning 

activities can play an important role in teaching youth decision-making skills.

5.4 Recommendation four: 

Teach youth financial research skills

Financial research skills include the ability to find and evaluate relevant financial information 

and the development of mental “guideposts” that prompt people to recognize situations in which 

they should seek out additional information. Financial research skills are critical because they 

help prepare youth for a lifetime of financial decision-making and navigating complex choices in 

a variety of financial situations.
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Schools, youth programs, and policy leaders can help youth boost financial research skills by 

providing access to:

§ Opportunities to build the knowledge and skills to find and evaluate financial 

information.

§ Lessons that integrate case studies to help develop mental “guideposts” that prompt 

youth to recognize situations in which they should seek out additional information.

§ Opportunities to conduct financial research using exercises that guide participants 

through the step-by-step process of seeking information, determining its validity, and 

weighing the available options.
24 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

6. How can you incorporate the 

developmental model in your 

work?

This resource offers new ideas and insights that program leaders, parents, content providers, 

and policy and community leaders can use to help American youth enter adulthood prepared to 

effectively navigate the financial marketplace and make money choices that advance their life 

goals. This resource is designed to:

§ Help service providers incorporate the developmental model into existing child and 

youth programs, initiatives, and financial education programs and resources.

§ Assist in the innovation of new financial education strategies.

§ Inform financial educators, policymakers, community leaders, and funders about 

promising evidence-based strategies.

For more detail about the research, read the full report, “Building blocks to help youth achieve 

financial capability: A new model and recommendations,” online at: 

http://files.consumerfinance.gov/f/documents/092016_cfpb_BuildingBlocksReport_ModelAn

dRecommendations.pdf.
25 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

7. Conclusion

Understanding how consumers navigate their financial lives is essential to helping people grow 

their financial capability over the life cycle. The developmental framework described in this brief 

provides new evidence-based insights highlighting the need for policy initiatives and programs 

that support the development of executive functioning, healthy financial habits and norms, 

familiarity and comfort with financial facts and concepts, and strong financial research and 

decision-making skills during childhood and early adulthood. The CFPB’s research reaffirms 

that financial capability is not defined solely by one’s command of financial facts but by a 

broader set of attributes acquired and honed over time as youth gain experience and encounter 

new environments. This brief identifies the developmental building blocks, by stage of 

childhood, that support overall financial capability.

The recommendations provided are intended to suggest actions for a range of entities, including 

financial education program developers, schools, parents, caregivers, and policy and community 

leaders, toward a set of common strategies so that no one practitioner needs to tackle them all. 

This resource provides new ideas and insights. 

The CFPB is committed to engaging and supporting organizations working to ensure that all 

children and youth have access to evidence-based, age-appropriate, and developmentally 

appropriate financial education. We have started by leveraging these research findings to inform 

the financial education tools and resources that we provide to parents, caregivers, and 

educators. Some examples of this include “Money as you grow” and “Personal finance teaching 
26 REPORT BRIEF: BUILDING BLOCKS TO HELP YOUTH ACHIEVE FINANCIAL CAPABILITY

pedagogy”.31,32 In the policy arena, the CFPB is committed to promoting these findings to a 

variety of policy and community leaders working to advance financial education in states and 

nationally. For more information on the CFPB’s financial capability resources for youth, please 

visit consumerfinance.gov/youth-financial-education.

The full report, “Building blocks to help youth achieve financial capability: A new model and 

recommendations,” is online at 

http://files.consumerfinance.gov/f/documents/092016_cfpb_BuildingBlocksReport_ModelAn

dRecommendations.pdf. It provides a more detailed discussion of the developmental model and 

recommendations.

 

31 Money as you grow, Consumer Financial Protection Bureau (2016), available at consumerfinance.gov/money-asyou-grow.

32 CFPB personal finance teaching pedagogy, Consumer Financial Protection Bureau (2016), available at

http://files.consumerfinance.gov/f/documents/092016_cfpb_YouthFinEdPedagogy.pdf.