The Callister sisters Lucia 7 (L) and Georgiana 9 receive their age amount in pocket money for doing chores around the house. Kids form lifelong money habits by the age of seven Children understand how to save for something they want Parents need to be aware of the financial influence Want to improve your finances? It may pay to take a lesson from your kids as a new study shows children know how to handle money by age seven. A Cambridge University study co-authored by David Whitebread found that the way children approach complex financial decisions are formed in the first few years of their life. The study found children knew how to count money, recognise its value, understand it can be exchanged for goods and what it meant to earn an income. It also showed they knew how to plan ahead and wait for things, while understanding that some choices couldn't be reversed. But they did not yet have an understanding of the difference between luxury and necessity. The results have been used by the UK's Money Advice Service to urge parents not to underestimate the effect their money habits have on their children, according to the UK's The Telegraph. "This study really demonstrates the power of parental influences, and illustrates how much of what you learn and absorb when you are young, both consciously and subconsciously, affects the choices you make throughout the rest of your life," said the Money Advice Service's chief executive Caroline Rookes.