June 4, 2018
We know that children learn about money and adopt financial habits from their parents. A new survey out from Chase reinforces this fact, finding that around two thirds of Americans say their family or parents influenced their savings and spending habits. The same survey gives us some insight into how parents are faring when it comes to teaching their children about money. Unfortunately, Tom, there is a lot of room for improvement.
There were a number of findings that should raise eyebrows, Tom. First, just 56 percent of Americans said they have talked to their children about money! That is a scary finding, especially considering that parents are our primary source of financial information. When split by generation, that number falls to 49% for Baby Boomers, and just 43% for Millennials. Interestingly, the survey reveals that the more a generation’s own parents talked to them about money, the less likely that generation was to talk to their children.
Another area of concern was knowledge of credit scores. Just 1 in 3 parents (32%) reported explaining credit scores to their children or how to build and improve their credit report. At the same time, 38% of respondents had encouraged their children to get their first credit card. Very few parents are explaining one of the cornerstones of financial life to their children or helping them to understand one of the largest tools to build credit.
The best news out of the survey is that 8 in 10 parents said that it was never too early to talk to your children about money. That is exactly right. If we start introducing basic financial concepts early – the value of money, where it comes from, buying things with money as an exchange – it will have great benefits for your child later in life. Parents seem to be aware that they need to start talking to their children about money early. Unfortunately, few parents are actually doing it.
The second finding that leaves me optimistic is that some parents – 3 in 10 – are hungry for resources about how to have the talk and communicate financial concepts to their children. This number also needs to be higher, but it is a start.
There are! The American Bankers Association has a very good page on their website about how to talk to your kids about money, as does Mint.com. Both of these have educational materials, articles and games to help parents teach financial literacy. If you want to better understand and explain credit scores, go to myFICO.com.
You do not have to be a financial advisor to start your kids off on the right track, Tom. There are tools available to help you teach your child to be financially literate! The worst route is not talking to them about money at all.
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