{"id":934,"date":"2025-06-12T10:37:42","date_gmt":"2025-06-12T09:37:42","guid":{"rendered":"https:\/\/blog.lboro.ac.uk\/cmc\/?p=934"},"modified":"2025-12-19T13:14:19","modified_gmt":"2025-12-19T13:14:19","slug":"can-four-year-olds-understand-money-what-we-learned-from-arlos-adventures","status":"publish","type":"post","link":"https:\/\/blog.lboro.ac.uk\/cmc\/2025\/06\/12\/can-four-year-olds-understand-money-what-we-learned-from-arlos-adventures\/","title":{"rendered":"Can Four-Year-Olds Understand Money? What We Learned from Arlo\u2019s Adventures."},"content":{"rendered":"\n

This blogpost was written by Dr Iro Xenidou-Dervou and Professor Tim Jay. Iro is a Reader in Mathematical Cognition at Loughborough University. Drawing on cognitive developmental psychology, her work explores how children develop mathematical and financial literacy skills. Tim is Professor of Psychology of Education at University of Nottingham. His work uses design research methods to improve learning in formal and informal contexts. Edited by Dr Bethany Woollacott.<\/em><\/p>\n\n\n\n

In this blog post, Iro and Tim discuss financial literacy for children as young as four years old. Based on a large-scale validation of a comic-strip-based assessment called Arlo\u2019s Adventures<\/strong>, this post outlines how researchers tested the tool\u2019s reliability and scalability (link to project page at the end of this blogpost). It also highlights how children\u2019s early numeracy skills relate to early financial literacy skills and why parental confidence doesn\u2019t always align with children\u2019s actual knowledge.<\/p>\n\n\n\n

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An extract from Arlo’s Adventures<\/em><\/figcaption><\/figure>\n\n\n\n

Introduction<\/strong><\/h2>\n\n\n\n

Imagine asking a four- or five-year-old where money comes from or what it means to save. You might get a surprising answer such as \u201cFrom the card machine\u201d or \u201cYou just tap your watch!\u201d. These responses may seem amusing, but they reveal something deeper: children are absorbing ideas about money earlier than we might think.<\/p>\n\n\n\n

Until recently, we lacked reliable ways to measure what young children actually know and understand about money and finance. Without such tools, it is difficult to design or evaluate financial literacy programmes aimed at the early years. This blog post explores our journey to fill that gap, using a story-based tool called \u201cArlo\u2019s Adventures<\/em>\u201d to assess the financial literacy of children as young as four. You can download Arlo’s adventures, a user guide and the research behind it here<\/a>.<\/p>\n\n\n\n

Why was this research needed<\/strong>?<\/h2>\n\n\n\n

Financial literacy plays a crucial role in lifelong well-being; however, research suggests that adults have consistently low levels of financial literacy, both in the UK and worldwide1<\/sup>. Research also tells us that early experiences, i.e., how and when children begin to think about money, are foundational to financial habits formed later in life2,3<\/sup>.<\/p>\n\n\n\n

Yet, before Arlo\u2019s Adventures<\/em>, there was no validated method to assess financial literacy in children under six. This left a critical gap in our ability to design and evaluate programmes aimed at enhancing the early development of financial skills.<\/p>\n\n\n\n

Testing the efficacy of Arlo\u2019s Adventures<\/strong><\/h2>\n\n\n\n

Arlo\u2019s Adventures<\/em> tells the story of an alien, Arlo, who crash-lands on Earth and must earn, save, and spend money to repair their spaceship4<\/sup>. The story unfolds through comic strips, which interviewers use as prompts to ask children specific questions about their knowledge and personal experiences with money.<\/p>\n\n\n\n

Children are asked questions such as:<\/p>\n\n\n\n