For children to be financially healthy, their parents need to tell them how to get there — mostly because they wish someone had told them how to get there.
Most parents agree that having money conversations with their children is important. A study from investment company Capital Group says parents today are teaching their children about money at a younger age than they were taught.
The younger the kid, the better. The study says millennial and Gen X parents are teaching their kids about money at an earlier age than their baby boomer parents — if they were taught at all.
“Most Americans who are investing for retirement today wish that someone had shared advice on saving and investing with them when they were teenagers or young adults,” the study says. “Some parents wish they had started teaching their children earlier — but often this is a lifelong learning process, and many are still at it.”
They might be having trouble because they don’t have a good model to go off of. Parents are aware they don’t know enough about money, so they’re having a hard time talking to their kids about it. The vast majority of them think there should be some sort of financial literacy taught in high school.
Among the findings from Capital Group:
- Mothers are more likely than dads to talk about different money topics with kids, including establishing good credit and saving at an early age.
- Thirty-nine percent of millennial parents start having money conversations with kids 12 or younger (compared to 22 percent of baby boomer parents).
- Most parents believe money talks start at home, but 51 percent of them believe schools should play a role in financial literacy.
Always listen to mom
The study found that moms are having the money conversations more often than dads are, regardless of the topic, like:
- Having good credit: 76 percent of moms vs. 62 percent of dads
- Early saving: 70 percent vs. 64 percent
- Making a budget: 60 percent vs. 52 percent
- Saving for college: 38 percent vs. 33 percent
- Buying insurance: 44 percent vs. 31 percent
There were only two instances where dads were talking to their kids about money more often than moms: investing and buying a car. But both were only a percentage point difference.
Start them young
It’s important to establish financial literacy early on, and millennial parents believe money conversations never really end.
Nearly 40 percent of millennial parents plan to have financial conversations with their kids at 12 years or younger. And the type of conversation varies depending on how old the child is.
For example, one-third of parents will talk to their kid about saving for college before they turn 12. Thirty percent believe saving is an important topic to cover at an early age. And 19 percent will talk about basic budgeting with their pre-teens.
As kids age, the more complex topics come up. Here are the top money discussions parents say they have with their older children…
- Buying a car: 60 percent
- Credit cards: 58 percent
- Budget lessons: 52 percent
Financial literacy in the home and beyond
When it comes to educating young people about money, and American students are failing more than kids in other countries. But that’s not stopping parents from pushing to have financial literacy taught in public schools. Just as reported in the Capital Group study, Americans want schools to teach their kids about money.
Unfortunately, schools are failing at properly preparing students with basic money knowledge.
“Parents, schools, and financial advisors ranked as the top three choices,” the study says. “This is problematic given that most schools do not teach about savings and investing, and many Americans do not use a financial advisor.”
Originally published at www.debt.com on September 18, 2018.